Interest payments on mortgages soar

Record high interest bills are hitting mortgage borrowers as rising and high interest rates bite.

Friday, October 27th 2023, 10:41AM

by Sally Lindsay

The Reserve Bank’s latest Residential Mortgage Loan Reconciliation shows borrowers will, in this calendar year, probably pay their banks more than $17 billion in mortgage interest.

In the Sept quarter they paid $4,627b – a new record – and a big rise from $3,549b in the Dec quarter last year and double the $2,323b in the Sept quarter,b2021. The last big quarter for interest payments was in June – $4,219b.

The amount borrowers owed at the end of the Sept quarter was $348,707b. Just over $9b in loans was fully repaid, with excess payments of just over $4b. The value of drawdowns of new mortgage lending was the same as last quarter at $17.9b.

The RBNZ’s Sept statistics show $5.2b of new mortgages were lent, down 10.2% from $5.8b in Aug, but a rise of 1.2% annually. It is the second month of an annual increase since Aug 2021.

First home buyers dominated the Sept statistics, with borrowing rising by 17.8% compared to Sept last year. Lending to investors also increased by 10.5% over the year, while the value of new mortgages to owner-occupiers fell by 7.5% over 12 months.

The share of new mortgages to first home rose to 24.1% in Sept up from 23.7% in Aug. The share has increased from 20.7% in Sept last year and has exceeded the share to investors every month since April last year. Investors' share of new mortgages has reached 17.2%, up 15.8% a year ago..

Nearly 15,000 new mortgages were written last month, down 6.2% from 15,952 in Aug, but up by 2.7% from 14,578 last year.

New loan average values fell across all borrower types to $347,000 last month, down from $362,500 in Aug, while top-up values have fallen by 13.2% compared to Sept last year. On the other hand, property purchases have risen by 3.7% and changes in loan providers have risen by 17.7% over the same period.

Tags: interest rates