Property investors continue to pull back in New Zealand, with the latest data from the Reserve Bank of New Zealand (RBNZ) showing that Auckland investors have reduced their share of mortgages to 38% in December – a sharp moderation from the 48% peak share recorded in June 2016:
The slowing in investor mortgage demand follows new loan-to-value ratio (LVR) restrictions targeting investors from the RBNZ, which officially came into effect on 1 October, although banks have been informally applying the rules since they were first announced in mid-July.
The share of investor loans in the rest of New Zealand was also just 15%, down from 26% in June.
Moreover, as shown below, investors nationally comprised just under 27% of total lending in December by value (17% by number), whereas first home buyers accounted for a pitiful (but improving) 14% of lending by value (8% by number):
However, the share of new loans that are interest-only was 35% in December down from 40% in June, whereas the share of new investor loans that are interest-only was 53% in December, down marginally from the 55% recorded in June:
The investor LVR restrictions from the RBNZ seem to be having an impact. Although it remains to be seen whether the dampening effect will be maintained, nor whether it will rein-in house price growth.
The RBNZ was widely expected to follow up with new debt-to-income rules this year. However, it needs agreement from the National Government to add them to its macro-prudential toolkit, which is not yet forthcoming.
To the RBNZ’s credit, it has at least tried to pro-actively manage housing risks, which is a far cry from APRA/RBA.
