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Mortgage lending hits two year high

Mortgage lending is flying in the face of the cooler housing market with Reserve Bank data showing May saw the highest level of new lending in nearly two years.

Thursday, June 28th 2018, 7:00AM

by Miriam Bell

There was a total of $6.592 billion in new mortgage lending in May, according to the Reserve Bank’s latest data.

Not only is that a big increase from the $5.375 billion of new lending seen in April, but it’s the highest total since June 2016.

Of the different borrower groups, it is first home buyers that have seen the biggest increase of late.

In May, they were responsible for $1.116 billion of new lending, which is a big jump up from the $868 million they borrowed in April.

It equates to a 16.9% share of the total new lending in May, up from around a 16% share in April.

Further, May’s total was the first time first home buyers have accounted for over a billion of lending since the Reserve Bank started its monthly release of the data back in August 2014.

Given the total was up, it’s no surprise that the amount of new lending to both investors and owner occupiers was also up.

Investors borrowed $1.564 billion in May, as compared to $1.264 billion in April. This was the highest amount they were responsible for since August 2016.

It also equates to a slight increase in their share of new lending to 23.7%.

But this remains well down on the 35% share that investors had before the Reserve Bank introduced the third round of LVRs back in June 2016.

When it comes to higher than 80% LVR lending, the amount that went to first home buyers also jumped up significantly.

They accounted for $376 million of new higher than 80% LVR lending in May, up from $275 million in April.

In contrast, investors accounted for just $10 million of new higher than 80% LVR lending in May, up from $9 million in April.

The data suggests that the Reserve Bank’s easing of the LVRs from January this year has resulted in more borrowers getting mortgages, despite tighter servicing criteria on the part of banks.

It also supports the view that tighter lending criteria is playing a significant role in holding back buyer demand, which means the likelihood of the Reserve Bank relaxing the LVRs further any time soon is low.

On releasing the Bank’s Financial Stability Report in May, Reserve Bank governor Adrian Orr said that financial risk has lessened with both lending and house price growth slowing in the last 12 months.

This was in part due to the imposition of the LVR restrictions, he said. “This more subdued lending growth needs to be further sustained before we gain sufficient confidence to again ease the LVR restrictions.”

 

Tags: banks Lending LVR Macro Prudential Tools mortgages RBNZ Reserve Bank

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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