Latest Reserve Bank figures show that mortgage money advanced last month rose by over 8% on a seasonally-adjusted basis

By David Hargreaves

If we were looking for further evidence that the housing market is coming to life, it has been provided by the latest Reserve Bank mortgage figures.

According to the RBNZ's August figures for new mortgages, the amount of money advanced rose by over 8% on a seasonally-adjusted basis.

The $5.782 billion worth of mortgages committed to in August 2023 was up from $4.997 billion in July 2023.

More significantly than that though, it was up 6.8% on the $5.413 billion of mortgages committed to in August 2023.

We need to stress that all these figures are coming off a low base - the figures in July 2023 were, for example, the lowest mortgage figures for a July since 2017. But nevertheless, there are clear signs of a rise in activity, even though the election is just around the corner.

And the RBNZ says it is the first time this year where we've seen a month in which the total of mortgage commitments has actually been higher than the corresponding month of 2022.

These latest mortgage figures from the RBNZ very much back up the rising activity trend that was shown in August housing sales data.

The RBNZ said a monthly and annual increase was recorded across all borrower types in August 2023.

Lending to first home buyers rose to $1.368 billion (up 10.5% from July 2023, and 21.7% from August 2022), lending to other owner occupiers rose to $3.34 billion (up 17.5% from July 2023, and 0.6% from August 2022), and lending to investors rose to $986 million (up 15.6% from July 2023, and 9.0% from August 2022).

The share of new mortgage commitments to first home buyers fell slightly to 23.7%, down from a record high of 24.8% in July. However, the RBNZ said this is still 2.9 percentage points higher than in August 2022.

Okay, that's the money, but what about the numbers of mortgages?

Well, the RBNZ said there were 15,952 new mortgage commitments by NZ registered banks in August 2023, up 15.6% from 13,795 in July 2023. In comparison to August 2022, the number of new mortgage commitments has risen by 5.6% from 15,109. These increases were also reflected across all borrower types.

The average value of new mortgage commitments across all borrower types rose to $362,500 in August, up slightly from $362,200 in July. The average value has risen 1.2% from $358,300 in August 2022. The average value for first home buyers was $551,400, down 2.0% from July 2023 and 3.0% lower than in August 2022.

So, spring has apparently sprung, as these mortgage figures back up what the general signs of activity in the housing market were showing us.

Economists have already been upgrading their forecasts for how the housing market will perform for the rest of this year and into next.

The economists at the country's largest bank ANZ, for example, have already raised their forecast of house price rises for the second half of this year to 4%.

What the RBNZ might make of all this will be of keen interest.

The central bank is having another review of the Official Cash Rate next week. Since its last OCR review in August the RBNZ has been confronted with evidence both that the economy is performing more strongly than expected - with GDP rising in the June quarter by a more than expected 0.9% - while the housing market has looked to be picking up more quickly than the RBNZ might have thought, although it did upgrade its housing forecasts at the August OCR review.

It will be though of some considerable interest to see if the RBNZ makes explicit reference to some of this stronger than anticipated activity in its review next week.

This story was originally published on Interest.co.nz and has been republished here with permission.