Loosened LVRs push up mortgage lending

The latest RBNZ data shows there was $5.8 billion of gross mortgage lending in August, up by $0.4 billion from a year ago.

As part of this CoreLogic says banks’ interest-only lending remains ‘under control’, with about 36% of loans to investors in August being done on this basis, compared to a cyclical peak of 46% in July/August last year, and a figure of only about 14% for owner-occupiers, compared to about 20% a year ago.

Perhaps the most interesting cut of these figures, however, says CoreLogic is the breakdown by loan to value ratio (LVR), which showed that lending to investors who don’t have the required 35% deposit – unless going new-build – remains almost non-existent.

By contrast, given the relaxation of the LVR rules, the past few months have shown a sharp rise in the share of lending to investors with a 35-40% deposit – a group precluded by the previous LVR settings.