PHOTO: CoreLogic
Today’s figures from the Reserve Bank (RBNZ) showed a small fall in the value of mortgage lending in March, reflecting fewer loans (but not a fall in the average size of each loan). Meanwhile, the banks continue to operate well below the LVR speed limits, with only 12.5% of lending to owner-occupiers done at >80% LVRs in March, versus the speed limit of 20%. The scrapping of capital gains tax proposals and the prospect of a cut in the official cash rate could help to support the market in the coming months.
CoreLogic Senior Property Economist Kelvin Davidson writes:
There are three key points from today’s mortgage lending statistics. First, the value of lending dropped year-on-year – it was a small fall, but still the first since March last year. Second, the number of loans is soft, but each loan on average is bigger. And third, banks are still operating well below the LVR speed limits. For those that can pass the deposit, income/expense and serviceability testing hurdles, the competition amongst banks and ‘rate wars’ are still making it a great time to be a borrower.
Looking at the actual numbers, there was $5.77bn of mortgage lending in March, down slightly (about $80m) from $5.85bn a year ago. The figure for owner-occupiers was up by more than $180m from a year ago, so the overall drop was driven solely by investors (see the first chart).
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