We’re in the middle of a global pandemic… so it was somewhat surprising to see NZ mortgage lending hit a record high of over $7.3 billion in September. According to the latest press release from the Reserve Bank of New Zealand, the residential mortgage lending by borrower type in September 2020 was the biggest lending since the RBNZ started compiling this monthly data in 2013.
WOW.
With record low interest rates and a flood of formally expat Kiwis returning home to Aeteroa cashed up it was not totally surprising to see these numbers coming through.
First time home buyers in September borrowed a new record high amount of just under $1.4 billion although their share when measured against the overall amount borrowed is starting to decline, down almost 1% from August 2020 to 19% from 19.8% the previous month.
The borrowing that the banks are seeing increase is for INVESTMENT property. New Zealand property investors borrowed nearly $1.7 billion in September, for a 22.7% share of the mortgage market, up from 21.4% the previous month. Not only are investors making up a bigger percentage of the overall mortgage borrowing, they are also borrowing higher amounts.
The amount of high loan to value ratio (Read more about LVRs here) borrowing, which for investors is classified as above 70% of the value of the property, was $611 million in September, up from $491 million in August. A big jump and even bigger when you consider that the amount of high LVR money borrowed by investors since June, when it was $204 million, has effectively tripled.
All of this is a partly expected response to the RBNZ lifting LVR restrictions in May to keep buoyancy and activity in the market and economy. LVR restrictions had been in place in some form since 2013 and when they were lifted in May the original plan was for a period of around 12 months. With the booming borrowing market this may be pulled back sooner however and the Governor of RBNZ, Adrian Orr, said last week that the central bank was "looking at" the possibility of reinstating them sooner.
Much of the property boom is being driven by the regions, rather than Auckland, with annual rates of lending in the rest of NZ increasing at a faster rate than those in Auckland.
If you are in the market for a property or considering refinancing, here at Money Compare we have partnered with some of the leading mortgage broker experts in the country to help you make a fully informed choice on your home loan, whether as a first time buyer, investor or if you are looking to make the most of record low interest rates and save on your current mortgage repayments – we have recently documented a case study from an NZ Compare user who is now saving over $1,380 a MONTH on their mortgage repayments after they used one of our broking partners to refinance their home loan.
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NZ Mortgage Lending – Some Key Facts
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Here at Money Compare we can help you to get into your first home, refinance a current property or make that first move into property investment. Working with a mortgage broker to find the best home loan rate for your situation makes the process of buying a home or refinancing quicker and easier than doing it all by yourself or direct with the bank.
A good mortgage broker will scour the NZ home loan market to find you the very best deal and they can advise you on everything you need to know about taking out a mortgage and the house-buying process as well as walk you through things like a KiwiSaver withdrawal or first time buyer grants if applicable.
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