Investors dominating market

New Reserve Bank data leaves little doubt investors are a dominating force in the market.

Thursday, May 26th 2016, 12:00AM 1 Comment

by Miriam Bell

Investors appear to have adjusted to the Auckland-investor focused LVRs introduced by the Reserve Bank last November.

The Reserve Bank’s latest residential mortgage lending statistics show that investors have shrugged off any lingering wariness and are a dominant force in the market.
Their share of the new lending total increased in April.

Total new bank lending in April was $6,504 billion. This was down on March’s record high of $6,572 billion.

Investors accounted for $2,386 billion of April’s new lending. This was up on the $2322 billion that went to investors in March.

Owner-occupiers remained the biggest group of borrowers, claiming $3,260 billion of April’s new lending. But this was a decrease from the $3,408 billion they borrowed in March.

The share of the new lending that went to first home buyers also went up.

First home buyers borrowed $789 million in April. This was up on the $753 million they accounted for in March.
Within April’s new lending, there was a total of $493 million higher than 80% LVR lending. This was down on $517 million of higher than 80% LVR lending borrowed in March.
Investors’ accounted for a lesser share of the higher than 80% LVR lending than either owner-occupiers or first home buyers.

They borrowed $46 million of the higher than 80% LVR lending total, which was up on $42 million they were responsible for in March.

While owner-occupiers ($206 million) and first home buyers ($241) accounted for more of the higher than 80% LVR lending, both groups share of the total dropped in April.

Total lending to investors is divided into two further categories: higher than 70% LVR lending and less than 70% LVR lending.
Higher than 70% LVR lending to investors rose again. It came in at $780 million in April, as compared to $773 million in March.
However, the bulk of April’s lending to investors was less than 70% LVR lending. It came in at $1,606 billion, which was up on March’s $1,549 billion.

The Reserve Bank also now provides data which breaks down total new lending commitments into Auckland investors, Auckland non-investors, and non-Auckland borrowers.

This breakdown shows that, of April’s total commitments, $1,623 billion went to Auckland investors, $1,913 billion went to Auckland non-investors, and $2,968 billion went to non-Auckland borrowers.

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