Kiwis leverage big into property

New data from the Reserve Bank of New Zealand, collated by, shows that Kiwis leveraged big time into property ahead of the Ardern Government’s investor tax reforms (announced in late March).

The proportion of new mortgages taken out with debt-to-income (DTI) ratios above five soared in the March quarter, with all borrower groups rising:


New Zealand DTIs rose significantly as property prices surged.

Auckland home buyers in general are far more leveraged than New Zealanders as a whole.

Over two thirds (67.7%) of first home buyers (FHBs) in Auckland took out mortgages with DTIs above five. This compares to just over half of first-home buyers (53.5%) nationally.

In a similar vein, just under a third (60.6%) of Auckland owner occupiers (not including FHBs) took out mortgages with DTIs over five over the March quarter. This compares to 45.4% nationally.

Thankfully, the proportion of high DTI lending appears lower in Australia, according to CoreLogic. Although mortgage stands have also deteriorated in Australia:

Australian mortgage lending standards

Mortgage lending standards in Australia deteriorated at the end of 2020.

It will be interesting to watch the impact of the RBNZ’s new loan-to-value ratio (LVR) curbs, alongside the impact of the Ardern Government’s investor tax changes.

Will they crash New Zealand’s highly leveraged housing market?

Unconventional Economist
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