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Latest Reserve Bank monthly mortgage figures show over $7.3 bln advanced for mortgages last month; advances to first home buyers hit record high also; high LVR lending to investors has tripled since June

by David Hargreaves


Mortgage lending hit a record high of over $7.3 billion in September.

According to the latest Reserve Bank residential mortgage lending by borrower type figures the September lending was the most since the RBNZ started compiling this monthly data in 2013.

First home buyers again borrowed a new record high amount of just under $1.4 billion, however their share of the overall amount borrowed is starting to decline and at 19% it was down from 19.8% in August.

The buyers on the march now are the investors. They borrowed nearly $1.7 billion in September, for a 22.7% share of the mortgage market, up from 21.4% the previous month.

And they are borrowing bigger amounts.

The amount of high loan to value ratio (LVR) borrowing, which for investors is above 70% of the value of the property, was $611 million in September, up from $491 million in August.

The amount of high LVR money borrowed by investors has effectively tripled since June, when it was $204 million.

The RBNZ lifted LVR restrictions, which had been in place in some form since 2013, in May, with the intent that they be removed for at least 12 months. However last week RBNZ Governor Adrian Orr said that the central bank was "looking at" the possibility of reinstating them.

On the question of the recent upsurge in activity in the housing market, Orr said last week: "When will it worry us? When we are seeing it being driven by very high leverage loans and when we are seeing it being driven by investors rather than households and that is where our tools are marketed.

"What are we seeing at the moment? - Early signs of exactly both of those.

"We are starting to see the new lending going back into the 70%-80% loan to value ratios and the investor side."

Much of the latest heat in the market is being generated in the regions, rather than Auckland, with annual rates of lending in the rest of NZ increasing at a faster rate than those in Auckland.

The Reserve Bank supplied the following key facts:

  • 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% from September 2019.
  • New mortgage commitments to 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.
  • 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%.
  • The nationwide 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%.
  • The year-on-year increase of 32.8% in new mortgage commitments was 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.
  • Monthly new mortgage commitments with high loan-to-valuation ratio have increased since the 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.

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