Number of new mortgages issued in June plummets after a surge through 2021
The housing market has continued to cool in June, fresh data from the Reserve Bank of New Zealand (RBNZ) has shown.
In June, banks issued 14,952 new mortgages, worth $6.1 billion – 43% fewer and worth 29% less than those issued in the same month the prior year.
While the fall was significant, it also came from a very high base, as new mortgage lending surged from mid-2020 through 2021 on the back of record-low interest rates, NZHerald reported.
Read more: What's happening with mortgage lending in New Zealand?
The value of new mortgage lending in June this year was 13% higher than it was in June 2020, and 11% higher than it was in June 2019.
New mortgage commitments, meanwhile, numbered 14,952 – the lowest for a June since the central bank started collecting this data in 2013. Fewer new commitments have been recorded in other months on a handful of occasions.
Read next: Housing markets continue to weaken as credit tightens and interest rates rise
The average size of new mortgages written in June was $405,029 – up $77,711 from the same month the previous year.
When it comes to who did the borrowing, 63% of new lending went to owner-occupiers, 18% to first-home buyers, 17% to investors and the remainder to businesses – a divide that has been fairly consistent since around May 2021 when the RBNZ tightened LVR restrictions for investors, NZHerald reported.
LVR restrictions, which were temporarily scrapped in 2020, require most investors to have at least 40% in deposit.
When LVR restrictions for owner-occupiers were tightened in November 2021, there was some concern that first-home buyers would be squeezed out of the market.
Indeed, new high-LVR lending, or lending to people with small deposits, decreased, with first-home buyers disproportionately affected to begin with. But first-home buyers secured a decent portion of new high-LVR lending in June, with 29%.
Towards the end of June, major banks said they were either temporarily halting or curtailing new high-LVR lending. The extent to which these moves are restricting mortgage lending is yet to be seen.
Factors slowing the housing market include higher mortgage rates as well as an update to consumer lending rules (the Credit Contracts and Consumer Finance Act), NZHerald reported.
