NZ mortgage growth falling as macro-prudential bites

By Leith van Onselen

The RBNZ has released its monthly credit aggregates data, which showed New Zealand household borrowing continuing to retrace sharply from September’s cyclical high, recording annual growth of 7.6% in June:

Most of New Zealand’s household debt is driven by mortgages, which has also retraced sharply to to 7.7% in the year to June 2017:

The cooling in mortgage growth coincides with separate RBNZ data, reported last month, showing that property investor lending has cooled materially since the RBNZ implemented new loan-to-value ratio restrictions targeting investors, which officially came into effect on 1 October 2016, although banks began informally applying the rules since they were first announced in mid-July 2016.

In particular, the value of investor mortgages taken out in June 2017 was down by 50% versus June 2016, whereas the number of mortgages was down 43%. In the hotspot of Auckland, the value of investor mortgages was down 43% year-on-year, whereas outside of Auckland investor mortgages were down 65%.

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