Latest mortgage figures from the Reserve Bank suggest first home buyers might have reached their limit in terms of market share, while investors might be showing some signs of life

The housing market bulls could happily trumpet a 23% year-on-year rise in mortgage advances for the January 2024 month, according to new figures.

The pessimists might, however, cruelly point out that the comparison figure, for January 2023 was - apart from the April 2020 lockdown month - the lowest monthly tally recorded in a data series dating back to 2014.

So, in reality, yes, the $3.413 billion of committed mortgage money for January 2024 as according to latest Reserve Bank (RBNZ) figures is up 23% on that January 2023 tally ($2.775 billion) - which we can now happily call the nadir of the recent down market, in terms of activity. However the January 2024 figure is down 35.6% on the December 2023 figure. And, yes, while of course it's not the worst January figure since the start of this data series, because that was last years' - it is the SECOND worst.

After a suitably soggy December of activity in the housing market, the 2024 year hasn't exactly raced out of the traps either.

But the year is young.

Also young (mostly) are the first home buyers (FHBs). They saw their share of mortgage money hit an all-time high in December of 25.2%.

I wondered at the time, and still wonder, if this will prove to be the peak.

The January 2024 figures show that in the month the FHB grouping took $822 million of mortgage money, which is 24.1% of the total. Still a historically very high level, but down from the record of a month earlier.

I recently dug back through the figures from the very start of this data series to track the shares of mortgage money taken on an annual basis by the FHBs, the investors and the 'other owner-occupiers. This showed that in terms of the annual share of the mortgage spoils, the FHBs had risen from just a 10.5% share in 2015, to 23.6% in 2023.

As has been commented on before, the early iteration of the loan to value ratios (LVRs) first applied by the RBNZ in 2013 hampered the FHBs getting into the market. The game changer for them came in mid-2016 when the RBNZ started applying tougher deposit requirements for investors - a situation that still applies today.

So, what of the investors?

They've basically gone in reverse to the FHBs. On an annual basis the investor grouping went from a 32% share of the total mortgage monies advanced, to just 17% last year.

Which way will they go this year then?

There did appear to be a bit of a twitch in terms of investor activity in the September-October 2023 period, which might or might not have been some anticipation of the election (on October 14) delivering a result more favourable to investors. However, the market share of the investors declined again in November and December, dropping to just 16.9% of the total in December 2023.

For January 2024 investors borrowed $607 million, which is 17.8% of the total and that share is well up on the just 15.4% share this grouping had in January 2023.

In fact the January 2024 investor share of 17.8% is that grouping's highest share since December 2022. And you have to go back to February 2022 to find a share that's higher.

The FHB grouping, which long languished behind investors in terms of the monthly total of borrowing, has now had a higher monthly total than the investors each month since March 2022.

But will that be about to change, now that the 'right' government is in place for the investors and more favourable policies are being put in place - most notably with the reintroduction of interest deductibility for investors?

That will be one of the most interesting things to watch this year, I think.