tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, October 11th, 6:54PM

Mortgages

rss
Latest Headlines

Mortgage lending slows to lower DTI rates

As the Reserve Bank gears up to start public consultation at the beginning of near year on debt-to-income (DTI) levels, its latest quarterly DTI figures show In September, $1.6 billion, or 31.1% of $5.2 billion of new mortgage lending was at a DTI of 5.

Wednesday, November 15th 2023, 10:20AM

by Sally Lindsay

This is the lowest share since the data collection began in 2017 and has been declining since the first month of 2021 when the housing market frenzy changed tack. Before that borrowing had been at excessive DTI levels.

For first home buyers (FHB), 29.7% of the value of new mortgages had DTI of 5 in September. This share has fallen from 41.5% in September 2022. A record low share of 28.1% of FHB mortgages had a DTI of 5 in August 2023.

Reserve Bank figures show the shares of new mortgages to each of the other three borrower groups – investors, other owner occupiers with investment collateral and other owner occupiers without investment collateral – with a DTI of 5 were all the lowest since the data collection began.

At the higher level of DTI of 7, the monthly share of new mortgages slumped to 5.2% in September, which is the lowest since the data collection began. This compares with 9.3% in September 2022. The highest share in this series was in January 2021, when 26.5% of new commitments were with a DTI of 7.

Other owner occupiers without investment property collateral and investors recorded their lowest share of new commitments with a DTI of 7 in September. The lowest share for first home buyers also occurred during this quarter, at 1.1% in July.

Average gross income for first home buyers was $152,700 in September, up 4.7% annually from $145,800 in September last year, while the average gross income for other owner occupiers without investment property collateral increased by 9.9% over the same one-year period to $202,500, up from $184,200.

Borrower gross income is the amount a bank is prepared to count in its servicing analysis and can include the income of more than one person.

The quarterly share of lending to first home buyers with a DTI of 5 and a loan-to-value ratio (LVR) of 80% dropped to 8.4% in the third quarter, down from 12.6% in the third quarter of last year. This share was also below the 8.7% share last quarter, despite an easing in LVR restrictions from 1 June.

The share of lending to other owner occupiers without investment property collateral with a DTI of 5 and an LVR of 80% declined annually to 1.7%, down from 2.4% in the third quarter of last year. The share was also 1.7% last quarter.

The Reserve Bank has been coy on if DTIs will be introduced next year. In its most recent Financial Stability Report it says work continues on developing a framework for imposing restrictions on high DTI mortgage lending, which will complement the current LVR policy by focusing on a different dimension of risk.

Banks are developing reporting and management systems so DTI restrictions can practically be implemented by April 2024. We are currently assessing how a DTI tool could be calibrated alongside LVRs and intend to consult publicly on the calibration and implementation of potential DTI settings in early 2024.

If implemented, restrictions would likely take effect from around mid-2024.

However, what the new Government’s reaction to this is unknown, but the Reserve Bank and former finance minister Grant Robertson signed a memorandum of understanding (MOU) that the RBNZ will inform the finance minister and treasury before making any decision on introducing any macroprudential policy instrument.

Tags: RBNZ

« Mortgage advisers dominate ANZ's new home lendingANZ will continue to sell home loans directly »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.94 - - -
AIA - Go Home Loans 8.49 ▼6.19 ▼5.69 ▼5.69
ANZ ▼7.89 6.79 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 6.19 5.69 5.69
ASB Bank 8.39 ▼6.19 ▼5.69 ▼5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 6.19 5.79 5.79
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One ▼7.94 - - -
BNZ - Rapid Repay ▼7.94 - - -
BNZ - Std ▼7.94 6.45 5.89 5.79
BNZ - TotalMoney ▼7.94 - - -
CFML 321 Loans 6.70 - - -
CFML Home Loans 6.95 - - -
CFML Prime Loans 8.75 - - -
CFML Standard Loans 9.70 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼5.99 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 8.15 ▼6.19 ▼5.75 5.69
Co-operative Bank - Standard 8.15 ▼6.69 ▼6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.60 6.10 -
First Credit Union Standard 8.50 7.20 6.70 -
Heartland Bank - Online 7.99 6.69 6.35 6.15
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 6.15 5.69 5.69
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 8.25 7.19 6.69 6.59
Kiwibank - Offset 8.25 - - -
Kiwibank Special - 6.29 5.79 5.79
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.75 6.69 6.19 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.49 ▼6.95 ▼6.29 ▼6.29
SBS Bank Special - ▼6.35 ▼5.69 ▼5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.94 5.45 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
TSB Bank 9.19 7.09 6.59 6.59
TSB Special 8.39 6.29 5.79 5.79
Unity 8.64 6.29 5.79 -
Unity First Home Buyer special - 6.20 - -
Wairarapa Building Society 8.50 ▼6.50 ▼5.89 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 8.39 6.47 6.10 5.79

Last updated: 12 October 2024 6:37pm

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com