New residential mortgage lending takes a masive dive | RBNZ - Property News NZ

PHOTO: March, 2023 figures show you we are in for a slowing of house sales. FILE

The New Zealand housing market has experienced a significant slowdown in the number of mortgage applications for residential real estate in recent times. There are various factors contributing to this trend, including rising interest rates, stricter lending criteria, and a cooling of the property market.

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One of the primary reasons for the drop in mortgage applications is the rise in interest rates. Over the past few years, New Zealand has experienced an increase in the cost of borrowing money, with interest rates going up from historically low levels. This rise in rates has made it more expensive for homebuyers to borrow money, reducing their purchasing power and dampening demand for housing.

Another factor contributing to the decline in mortgage applications is the tighter lending criteria imposed by banks and financial institutions. In response to concerns about high levels of household debt, the Reserve Bank of New Zealand has introduced new lending restrictions, including limits on high loan-to-value ratios and stricter requirements for proof of income and affordability. As a result, many prospective homebuyers are finding it more difficult to secure financing, which has further dampened demand for housing.

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In addition to these factors, the property market in New Zealand has cooled in recent years, with house prices stabilizing after a period of rapid growth. This cooling trend has reduced the urgency among buyers to enter the market, leading to a decline in the number of mortgage applications for residential real estate.

Previous years:		Monthly:
	Feb 2021	Feb 2022	Oct 2022	Nov 2022	Dec 2022	Jan 2023	Feb 2023
Total lending ($million)
All borrower types	7,601	5,730	5,582	6,055	5,121	2,775	3,836
First home buyers	1,182	954	1,219	1,357	1,110	640	815
Other owner-occupiers	4,527	3,656	3,379	3,656	3,020	1,667	2,329
Investors	1,839	1,057	904	957	913	428	626
Business purposes	52	64	80	84	78	39	65
Higher than 80% LVR lending ($million)
All borrower types	591	312	501	567	470	292	363
First home buyers	426	211	381	440	369	233	266
Other owner-occupiers	160	96	110	121	95	56	88
Investors	4	5	8	6	7	2	8
Business purposes	1	0	2	1	0	1	0
Less than or equal to 80% LVR lending ($million)
All borrower types	7,010	5,418	5,081	5,488	4,650	2,483	3,473
First home buyers	756	743	838	918	741	408	549
Other owner-occupiers	4,367	3,560	3,269	3,536	2,926	1,611	2,241
Investors	1,835	1,052	896	951	906	426	618
Business purposes	52	64	79	83	78	39	65
MEMO ITEM: Lending to investors ($million)
Total lending	1,839	1,057	904	957	913	428	626
Higher than 70% LVR lending	390	114	170	157	168	71	119
Less than or equal to 70% LVR lending	1,449	944	733	800	744	357	507
Higher than 60% LVR lending	1,003	332	326	339	332	148	205
Less than or equal to 60% LVR lending	836	725	578	618	580	280	421

General notes

Individual figures may not sum to the totals due to rounding
Percentage changes are calculated on unrounded numbers
You are free to copy, distribute and adapt these statistics subject to the conditions listed on our copyright page.

SOURCE: RBNZ