PHOTO: CoreLogic

CoreLogic research analyst Kelvin Davidson writes:

The Reserve Bank of New Zealand (RBNZ) has reported that mortgage lending activity rose again in December, the ninth consecutive monthly increase and the 11th in the past 12 months (see the first chart). Total lending in 2018 was $64.3bn, up by 8.9% from the figure of $59.1bn in 2017. In truth, December’s increase was hardly a shock, given the recent improving trend. Mortgage lending flows will probably remain solid in 2019, but any further increase in activity is likely to be slow and steady rather than spectacular.

Looking at December’s figures in more detail, it was reassuring to see that ‘risky’ interest-only lending is contained. The share of lending done on interest-only terms is holding below 30%, well down on previous peaks of more than 40% (see the second chart). It’s the investor share of interest-only lending that has really driven the drop in the overall figure over that period, although there’s also been less interest-only lending to owner-occupiers.

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