NZ Mortgage lending hits record high in September 2020

NZ mortgage lending

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.


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.




NZ Mortgage Lending – Some Key Facts

1. Total monthly new mortgage commitments were $7.3 billion in September – the highest month on record since the survey began in 2013. This is an increase of $0.5 billion (7.9%) from August 2020 and 32.8% year on year versus September 2019.
2. The split of new mortgage commitments in September was up in both main categories.  First home buyers were $1.4 billion in September, up from $1.3 billion in August while other owner occupiers increased from $3.9 billion in August to $4.2 billion in September.
3. The year-on-year increase of 32.8% in new mortgage commitments has been largely driven by regions outside of Auckland. The annual growth rate for new mortgage commitments in ‘non- Auckland’ increased from 27.1% in August to 37.2% in September, while rising from 24.5% to 27.0% in Auckland.
4. First home buyers accounted for 19.1% of new mortgage commitments in September, down from 19.8% in August while share of new commitments to investors rose from 21.4% to 22.7%.
5. Across the country, year-on-year growth in value of new mortgage commitments to first home buyers was 44.3%, while new commitments to investors was up 54.7%.
6. Monthly new mortgage commitments with high loan-to-valuation ratio have increased since the LVR restrictions were removed in May 2020. High LVR new mortgage commitments to investors saw an increase of 24.3% in September, up from 10.3% in August.  If you are looking at investing with high LVR terms we would recommend moving quickly as there is a likelihood of LVR restrictions returning sooner than the previously forecast timeframe of May 2021.

Money Compare - Here to help with your mortgage questions

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.

There is no one-size-fits-all mortgage and so a good mortgage broker will help you with working out which home loans most closely match your needs meaning you get the best mortgage for you.  

So why not start your search today?  At Money Compare we have relationships with multiple mortgage advisers so complete our short form and we'll be sure to connect you with the best match for your needs



Wednesday, 28 October 2020