New data published by the Reserve Bank of New Zealand (RBNZ) shows that Kiwi mortgage borrowers have dramatically reduced their exposures to property, with debt-to-income (DTI) levels of new mortgage commitments collapsing across the board:
As shown below, the percentage of new mortgages taken out with a DTI above six has plunged from 36% in January 2022 to 18% in September:
The sharp fall in DTIs follows a 33% crash in new mortgage commitments in the year to September, according to the RBNZ:
This collapse in mortgage demand is in response to the massive lift in total interest charged on outstanding mortgages amid sharp interest rate hikes from the RBNZ:
Given the RBNZ is tipped to lift rates aggressively over coming months to tame stubbornly high inflation, Kiwi mortgage borrowers will continue to deleverage.
In turn, New Zealand house prices will continue to fall.
