The first home buyers (FHB) are still, well, buying, but the investors have still got other things to do.
The pattern of a year that's seeing the FHBs getting plenty of room to borrow mortgage money as others decline the offer has continued in the latest month, according to the Reserve Bank's June figures for new mortgages.
The FHBs edged to yet another record high share (in a data series dating to 2014), up to 24.4% of the total mortgage money advanced, up from 24.3% as of May.
Investors on the other hand saw their share of mortgage monies drop from 16.9% in May to 16.5% in June.
In figures, the FHBs borrowed $1.385 billion in June, while the investors borrowed just $939 million.
There may be some slight signs of life showing in the market though.
The overall amount advanced for mortgages in June was $5.686 billion, down from $6.056 billion in June last year and down from $5.859 billion in May 2023.
However, according to RBNZ seasonal adjustment the June 2023 total's actually up by 7.6%.
And perhaps another slight sign of life is to be seen in the fact that there were 15,498 new mortgage commitments in June. While that's down 4.7% from 16,258 in May, it's actually up by comparison with June 2022, by 3.7% from 14,952.
But let's be clear, we are talking about possible signs of life from a very low starting point.
While a lot of numbers have been dropping, one number that's been going up sharply is the interest bill.
The RBNZ's separate quarterly loan reconciliation data shows that the amount of interest charged on mortgages in the June quarter crashed through the $4 billion mark for the first time since the start of this data series (2014).
For the record $4.219 billion in interest was charged in the quarter, up from $3.835 billion in March 2023 and just $2.77 billion in the June quarter in 2022.
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Interesting. My partner and I are 35. We have been going to open homes recently and I would say at least 75% of the people we see are over 50. We are looking in the under 1m range as well. Maybe these FHBs are all looking at new developments / apartments (which we have been avoiding).
But you must realise, "It's over. The Bottom is In!". And therefore, those you see at the Open Homes are looking to exclude you from the First Home Buyer market by leveraging up their existing equity in their own home(s) before the market rockets. Sorry, but you'll just have to borrow and pay more. But look on the bright side! You'll be excluded for wee while longer, but will be able to take your pick as those that buy today, have to sell tomorrow. (The witnessed behaviour is exactly why Inflation isn't beaten, it's just gathering its breath before the real move kicks in)
There's still huge amounts of existing mortgages rolling over from low interest rates into high interest rates, for most of 2024, plus a likely increase or two of the OCR. Prices have a big delay time on interest rate changes, so we haven't seen the bottom yet at all. I'd pick for it to keep going down for around half of next year still, and then flatten for a while (maybe several years).
Yip. From what i can see our leaders have a glorious plan. They are simply shovelling immigrants into nz and into houses, probably 2 to 3 fams per house... keeps rents and house prices well propped up. The worse the economy gets the more immigrants we pump in... and if they cant afford rents.. we give the accom supplements and benefits to help...
Short term thinking.. sure.. but by the time the fuse runs out the current leaders will be long gone.
No one should be impressed with complex datasets and modelling. With four parameters you can fit an elephant, and with five I can make him wiggle his trunk.
There is a tendency to overcomplicate things. Especially economists. When actually it’s pretty simple.
The primary driver of house prices today is affordability. Unless purchasing power changes (significant increases in salaries or banks are prepared to loan more money) kiwis simply can’t afford homes 7-10x salary and at 7% interest.
Everything else is just noise. Best case scenario stagnant house prices. But more fall’s likely.
Not *really* seeing a reduction in borrowing power from First Home Buyers (RBNZ C31). Looks like roughly 5% down on 2022. Maybe wage inflation has compensated for the higher interest rates? Or less investors (approx 40% down) = less competition and FHB have decent cash deposits?
Averages from RBNZ C31 (Total borrowed / Number of Borrowers)
- Jan 2020 - $448k June 2020 $451k
- Jan 2021 - $517k June 2021 $546k
- Jan 2022 - $577k June 2022 $588k
- Jan 2023 - $548k June 2023 $566k
I'm at upper band of market rent now so that's that. The other cost increases I get to eat. Has anyone seen their insurance bills this year?
Looking around at supply dropping in most areas and immigration strong, I think there will be a quick increase in rents over the next year (unless the Greens win) so if the tax policies stick around next year I will increase again.
Investors should have saved for a bigger deposit instead of leveraging themselves to the hilt. Sure, the tax deductibility changes are not ideal but all that happened was personal mortgages were no longer deemed as a legit business expense for tax purposes.
It's you and you alone that determined how much debt you want to carry, and how much you want to increase the rent by. Reckless borrowing from Landlords clambering over everyone else to buy existing houses is what has led us to this predicament.
Will be interesting to see what gives first… market rent increasing to meet new higher debt servicing costs, or investors defaulting and having to sell up. Maybe a bit of both, ie only the strong (underleveraged) survive.
And of course then will come the fabled holy ground, where renters are suddenly able to buy their houses from said failed landlords… More likely scenario, renters keep renting at higher prices, landlords pay more tax into Gov’s back pocket. Hidden tax grab to claw back Covid overspend… dressed as “solving the housing crisis”. That way, both mortgage holders and renters get to pay for the Covid party… Nice work Gov.
Where's the lose lose. All my properties have gone up in the last year the ones with ANZ their meteric shows from 10k on one house to 180k on another (I don't agree with it but I am not selling) I have added 2 new builds into that as I brought two old houses and have subdivided the sections and built on the back so tax deductions on that. Still tax deductions on all the old ones bar one. And with a new govt soon that most probably full deductions. So kindly tell me were I am losing averaging close onto 10 percent across the lot and that's at market value not rough or built value. I also built the 2 myself at cost. Maybe alot on here should spend more time looking and checking out than talking
Being a housing investor is not necessarily lose, lose, lose. It depends on what you pay for the property, where it is, how big the mortgage, what state it's in, what rent you're getting, a host of factors.
There's areas where buying property is very canny if you've done your homework, and found out what's happening in that area.
Healthy homes is a red herring. Too many landlords saying "why should I have to pay this" and leaving it past the required date when their tenants are freezing cold and paying through the nose to run a cheap undersized heat pump, if they are lucky to have one, to try and have a livable space. Whilst I know full well there are somerotten tenants out there who never open windows and treat a rental like a dump, the standards are there for a reason. My guess is landlords not wanting to fork out to do anything to their houses as they see it as a business investment and wish not to provide a half decent living space. Oh well, thecosts get passed through via rent until breaking point as with mortgage rates until the great sell off begins likely later this year.
Someone on here a couple of months ago suggested introducing compulsory Kiwisaver contributions would be a much better tool to control inflation than whacking up the mortgage rates. At least people get to use this retained money at a later date.
But you'd have trouble convincing Muldoon era voters, they'll be having flash backs of "reds under the beds".
A lot of people can’t afford to put food on the table. How can they afford KiwiSaver contributions if they cannot afford to live now. Conversely, those that understand that KiwiSaver is a crock and have organised their own retirement plan free of fees and with better returns, why would they want to put money into a loser of a scheme. This will never work until the idiots in charge recognise that Australians have a far superior system that encourages participation and we simply don’t.
If someone has a mortgage at that age it is highly likely it is due to divorce and having to buy again, or possibly partner or spose passing away leaving the other to pay down the rest, or poor decision making. I wouldn't call that a sucker, more so an unfortunate circumstance that realistically nobody wants to ever be in at a stage in life where it may not be possible to pay it down by the end of their days.
Will vary from place to place, typically Auckland and Wellington lead the way. Elsewhere you still have a couple of months to get in. Will not be a fast rise, still too many unknows with the election coming up, then again if National get in prices are set to rise. Nothing is set in concrete but it looks like the bottom to me.
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