Lending on new mortgages plummets

New lending to investors dropped by a whopping 41.4% annually to sit at a 17.1% market share of all mortgages.

The share of new mortgage commitments to investors with high LVR (60%) dropped from 32.1% to 30.1%, indicating they are still sitting on the fence and not buying while the effect of higher interest rates kick in and the removal of mortgage interest against expenses is worked through tax returns being prepared now.

Total mortgage lending for April fell $1.6 billion, or 22.1%, to $5.7 billion. Just $1 billion went to investors.

While the total value of mortgage lending plummeted during the month, the average size of each mortgage increased to a record high of $406,000, the first time it has broken the $400,000 mark.

Far fewer people are taking out mortgages. Just 13,939 new mortgages were issued, the third lowest figures for a month since the RBNZ started the data series in 2014. Two of those months have been this year and the other was in April 2020 when the country went into its first pandemic lockdown.

Of the new mortgages last month, $1 billion went to first home buyers, $3.6 billion to other owner-occupiers, $1 billion to investors and $0.1 billion were for business purposes.

The value of new mortgages to the four borrower groups dropped in April. New commitments to first home buyers had the smallest percentage drop, down 12.9% while new mortgages to other owner occupiers and investors were down 23.9% and 24.3% respectively.

The share of new mortgages to first home buyers rose 2% to 18.5% in April. This share has dropped for three consecutive months from a peak of 19.7% in December 2021. The share to other owner occupiers fell 1.5% to 63.2% in April.

First home buyers with high LVR (80%) rose from a record-low of 18.9% in March to 26.7% in April. Other owner occupiers with high LVR (80%) rose from 2.9% to 3.4%, making April the third consecutive month with an increase. All percentages are before exemptions.