Mortgage market held steady last month

New Zealand mortgage market

The latest statistics from RBNZ underline the resilience of the home lending market as prices continue to soar

The New Zealand (NZ) mortgage market held steady last month as total home loans reached $8.5 billion, down from the $8.9 billion recorded in May, but higher than the $8.4 billion recorded in April.

The latest statistics from the Reserve Bank (RBNZ) underline the resilience of the home lending market as prices continue to soar across the country.

The $8.5 billion lent last month far outstrips the $5.3 billion borrowed in June 2020. Yet it marks a decline on the peak of the market, in March, before the Government announced its reforms to cool activity. More than $10.4 billion was lent in March.

For the first time in several months, first home buyer lending in June was more than investor activity.

First time buyers borrowed $1.64 billion, while investors were lent $1.4 billion last month.

Other owner-occupiers borrowed $5.3 billion, down from $5.5 billion the month before.

The data offer more evidence of the market’s resilience in the wake of the Government’s housing market reforms, such as the extended bright-line test and phased removal of interest deductibility. However, a breakdown of Loan to Value Ratio (LVR) reveals new speed limits to curb investor lending are having an impact.

According to the Reserve Bank, the share of new mortgage commitments with high LVR to investors was down from 32.1% in May to 28.2% in June, the seventh month of declines in a row.

Higher LVR lending to investors has declined dramatically in recent months.

Just $132 million was lent to investors above 70% LVR last month, down from $844 million in November, before speed limits were reintroduced.

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