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Investors struggle as first home buyers catch up

Investor borrowing slumped to its lowest level since January 2018 in the final month of last year, according to new figures from the Reserve Bank. First home buyers, meanwhile, continue their resurgence in the market, nearly surpassing investors.

Tuesday, January 29th 2019, 3:13PM

Christina Leung

RBNZ data shows investors borrowed just $949 million last month, compared to $1.06 billion in December 2017. The figures are the lowest investor borrowing numbers since January 2018. In contrast, investors borrowed over $1.37 billion in December 2016. 

Overall figures show the market is holding up, with support from first home buyers a notable positive. FHBs borrowed $924 million, coming close to $949 million given to investors. In December 2017 FHBs borrowed just $767 million.

Historically, FHBs have lagged way behind investors, but they are beginning to close the gap. The December numbers follow on from a strong November in which FHBs borrowed $1.02 billion and investors $1.09 billion. 

Owner-occupiers take up the biggest slice of the market, but only posted marginal growth. Movers borrowed $3.4 billion in December, up from $3.2 billion in December 2017.

High LVR lending is also on the increase. Lending more than 80% LVR hit $493 million in December, with FHBs accounting for $334 million of that figure. 

The statistics reflect a number of policy measures designed to curb investor lending, such as tougher LVR speed limits and proposed tax hikes, as well as the foreign buyer ban. First home buyers, meanwhile, have benefited from flattening house prices in Auckland and historically low interest rates. FHBs have also been able to tap in to KiwiSaver funds to pay for their deposits.

The data supports the theory that there are a dwindling number of prime customers in the market, with mover and investor activity largely flat. The subdued market has led to another price war among the major banks, with the likes of Kiwibank and Westpac cutting mortgage rates below 4%.

Economists believe the housing market will hold firm in 2019. Christina Leung, of NZIER, believes LVR loosening will offset other headwinds. She said the data shows "there is still some strength in the housing market".

Leung said there is "potential for some softness in the housing market in the near term, but over the longer term we expect house prices will remain high given continued supply constraints". 

Brad Olsen, an economist at Infometrics, said "the tide is certainly turning in favour of first home buyers". He adds: "They are now a larger part of the market and continue to grow strongly. Interest rates remain low (with two banks currently offering special sub-4% rates) and are expected to stay low until 2020, and LVR restrictions loosening again in January 2019. However, Auckland remains unaffordable for many buyers, even though prices have reduced slightly at the end of 2018."

 

Tags: RBNZ Reserve Bank

« Kiwibank brings two year rate below 4%Interest-only lending contained: CoreLogic »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 10 July 2020 9:02am

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