Mortgage lending down as buyers pause
Home-buyers took a breather at the end of last year with new residential mortgage lending dipping.
Reserve Bank December figures show $5.86 billion in new lending was done during the month, down from $6.35b in November and the $6b in December 2015.
Owner-occupiers, including firsthome buyers, accounted for 72 per cent of the borrowing compared to 37 per cent for investors.
Loan Market mortgage broker Karen Tatterson said borrower activity typically slowed in December as people focused on getting through Christmas and the holiday period.
But last December had been slower than the previous year end, Tatterson said.
“We didn’t see the same sort of rush; people trying to get into the right school zone.”
Tatterson said a lot of properties were passed in at auction and some banks had told their customers not to bid at auctions but to wait until afterwards to negotiate a sale price.
She also blamed the slow start to summer.
“We didn’t have a very good start to summer and that affects people, too. It’s just a been a myriad of different things.”
The data showed a reduction in the percentage of lending to those with a deposit of less than 20 per cent, those perceived to be at the riskier end.
Just 5.6 per cent of the lending in December was done for borrowers with a loan-to-value ratio above 80 per cent, the lowest percentage since the central bank began monitoring the data in July 2015.
The drop is likely to have been influenced by increased lending restrictions which came into force in October.
Almost all investors must now have a deposit of 40 per cent, and there is a cap of 10 per cent for owneroccupiers borrowing with a deposit of less than 20 per cent throughout the country.
Investors borrowing has fluctuated since the change. In October investor borrowing fell to $1.45b but recovered in November to $1.74b. In December it fell to $1.58b. Christina Leung, an economist with the NZIER, said strong lending growth suggested the restrictions had had little effect.
“Lending on housing remains strong with annual growth running at over 9 per cent, suggesting the impact of the recent LVR [loan-to-value ratio] restrictions late last year has had only a muted effect on the housing market.”