New Zealand's mortgage pile grew by the most it has in over two years during May, while the annual rate of growth was the highest for over a year.
According to new sector lending figures from the Reserve Bank (RBNZ), the pile of outstanding mortgages (and this includes both bank and non-bank lenders) rose to $360.603 billion in May.
That's up some $1.323 billion from April and was the largest monthly increase reported since April 2022.
It meant the annual growth rate of NZ's mortgage pile increased from 3.1% as of April 2024 to 3.3% as of May - and that was the biggest annual rise since March 2023.
However, if we want to look just at the banks, they actually saw an increase of $1.397 billion in the month, to a total of $354.658 billion, which was the largest monthly increase since January 2022. Non-bank lenders saw their outstanding mortgage stock decrease during the month to $5.945 billion from $6.019 billion.
In terms of total monthly new mortgage commitments for the month of May, these were $6.909 billion, which was the highest monthly total since March 2022.
First home buyers took $1.48 billion of the new mortgage money, which was a 21.4% share of the total, up from 21.3% in April.
But it was down on the 24.3% share in May 2023, according to the RBNZ monthly summary.
The share of new commitments to investors, which was $1.304 billion, decreased to 18.9%, down from 20.1% in April. However, this was an increase on May 2023, when the share to investors was 16.9%.
In terms of non-performing housing loans, the figures from May showed some let-up from some recent sharp rises.
The total of non-performing housing loans rose to $1.911 billion from $1.901 billion in April.
According to the RBNZ's summary of the non-performing loans, the latest increase for the housing figure meant that the non-performing housing loans rose by $675 million in the past 12 months, with some earlier sharp monthly increases.
Non-performing commercial property loans actually fell by $17 million, while non-performing small and medium-sized enterprises (SME) loans fell $23 million (-2.5%).
In other sector lending details outlined in an RBNZ summary, personal consumer lending stock declined by $112 million (-0.8%) in May 2024, which was the largest monthly decrease reported since March 2022. Personal consumer lending decreased for both banks and non-bank lenders in May 2024, with each reporting declines of $107 million (-1.4%) and $6 million (-0.1%) respectively. The annual growth declined for the sixth consecutive month, down to 2.4%.
Business lending stock increased by $1.2 billion (0.9%), driven by a $1.1 billion (0.9%) increase in banks' business lending. The annual growth rate rose from 1.6% to 3.0% in May 2024.
Agriculture lending stock increased by $507 million (0.8%), which was the largest monthly increase since June 2023. The annual growth rate rose from 0.6% to 0.8%.
86 Comments
Question on this "growth" on mortgage lending?
If the lending books of banks is gaining, yet below cpi inflation, is it not shrinking in real monetary terms? Seems obvious in real terms.
As house values continue to deflate in the biggest market crash since the 1970s, I see many recent sales leaving the vendors massively out of pocket in the above mentioned REAL terms.
When i hear fools say property is the best great inflation hedge, I see an absolute "idiot in motion".
It's common bs talk on the FB property pages.....
Look at this gem in West Auckland. Sold 600K below RV....wow.
https://www.oneroof.co.nz/property/auckland/henderson/3-adriatic-avenue…
Massive, real inflation adjusted loss, over the last 8 years. Attempts to sell it 6 times.
This situation will be common over the later 2020s I believe.
Be interesting to know the thoughts and motivations of the owner over the last 8 years?
It maybe a good deal if its flicked on to a developer soon, (but most of these roosters are deadmen walking financially) but I believe we have still much larger declines to come, in the ensuing years...
Yes would have made a rapacious WINGMAN STYLE killing, anywhere near RV.......
Talk about missing the boat......this sucker/vendor has been self marooned on a parched rock on a windswept ocean. What were they thinking?
They were obvious sellers, just after buying this moneymaker, turned absolute moneypit.
Anyone know the recent owners?
These 2021/22 RVs are just the stuff of dreams now, not to be seen again, for many, many years.
It is very enlightening to see that some "Housing Investors" are complete economic numpties and know little of yield, asset allocation, history and the obvious downside or risk control.
These numpties will be the reason, self fodder and lead the next major down leg in our housing market.....
This is obvious to anyone who knows the mounting pressures in the current DDDebt and housing market.
You should be well aware??
It is a bit of an eye opener at times. Can find some great little nuggets if you're into schadenfreude. Just had another look on there today.
Someone's seeking advice. They're topping up an apartment over $500 per fortnight, if they were to sell they estimate a $50k loss (I'd wager it'd be higher than that as they seek comfort with a lesser than realistic value). Here's the kicker.....interest only mortgage with a rate in the 5% range.
Exactly, everything in life should be a learning experience, including observing the unfortunate, economic drongos on the FB property "investors" pages.
There are so, so many cautionary tales there, its incredible.
But I also see financial problems (of their owning makings, largely) with some of the various people I meet weekly.
Cautionary tales abound. Yvers would rather they were covered up, not dissected, not studied, just as all Real Estate Agents and Bankers want to censor the financial wmd they aided and helped create within NZ SINCE 2012.
Call it schadenfreude, or the financial train wreck careening towards a heavy truck, that's astride a rail crossing. It's all learning and that's why folks come here !
I guess Yvers still has a lot if life lessons to learn. He hits out at those of us, who have since 2020, and are still calling out stupid decisions.
I see it as a service to warn my friends and others here.
I do it very successfully and have stopped economic catastropies, mid thought sometimes.
It obviously hurts Yvers plans, to pass on his sodden, overinflated, overpaid, property bag, to the next poor sop.
I have stopped many from making disastrous financial decisions.
Remembering that the (slightly) increased lending is across an expanded market with record (though insufficient) completions.
The question remains can they continue to expand that lending without creating a wave of defaults in a struggling economy with rising unemployment?....I would suggest not, and the figures clearly demonstrate there is no comparable (in size) area of lending to take up any slack.
Interesting little pick-up in overall lending this month. Total bank loans in NZ were up by $3.5bn. Sadly, when you poke at what is driving the increase you find about $1.9bn of that $3.5bn is businesses making more use of revolving credit and interest-only loans. I wonder why that could be?
Net increases in bank lending are running at around 3% year-on-year - still below inflation. So, credit stimulus is negative - banks are destroying more money than they are creating in real terms. Thankfully, Govt are still deficit spending. You can see the net impact when you adjust the loans data and Govt cash influence for inflation (RBNZ D10).
The graph is here.
Govt are aiming to reduce the net amount of cash they inject into the economy to next to nothing this fiscal year (July 24 - June 25). With credit stimulus flat and Govt deficit spending cut, the economy will crash.
It looks, by all the Govts "intents and purposes" that the current Nz Govt are actively trying to crash the NZ economy!
Imho, they are wanting to do this now and quickly, so they can pin it all on Labour.
So when the near death, Nz economy is finally defibbed back to life in 2026, the Nats can lay the credit for the "Greenshoots of growth" from a dungeon of despair, to themselves.
Yet what will remain, of the whizzened husk, of the Nz economy, at the end of it all?
Nats Political mastery?
What we need to do is shrink the bureaucracy and cut loose those people who specialise in making money by getting in the way. Spending state money on productive things like infrastructure, energy independence, skills development is a good thing. Spending state money on your friends having endless wafflefests is not good.
If half that lending is resi backed business support loans, then as those businesses collapse there will be a mass sale of remaining equity before banks take it. Add in the cut back on govt splurge...yikes.
What will the market be in 2025. Indicators of "blood bath" are on the up.
More like Zombieland for you but I guess the numbers don't lie do they. Personally I'm expecting housing to be pretty boring for a a while, price increases pretty flat and interest rates hardly moving, this makes doing the sums pretty easy if you are looking at buying right now.
The pains of many "investors" continually topping up underwater rentals, was only going to last a short time, year or two max, once the covid cash buffers evaporated??
Paying out $200 to $600 a week, is really bad business in anyone's book??
With no lower mortgage rates cavalry coming to the rescue, (less than 4.5%) on the near horizon, quitting the proposition while you're still solvent, is the only viable solution.
"Doing the sums" only stacks up after another 20 to 30% drop from current market values. I do believe it's coming.
Hey Yvers,
Maybe my humour is not appreciated by those who borrowed recklessly, dangerously and thought it a one way bet that could not lose over the last 12 years of massive borrowing excesses, that pumped the Housing ponzi of all Ponzi's to record highs??
(yet it in turn hurt NZ inc, destroyed the dreams of the good FHBs)
I'm happy to be reasonably moderated and advised by the "powers that be" here, but take little advice from Kangaroo courts.
I will take your thoughts into consideration......somewhat.
Enjoy the great Matariki holiday. We live in a great place and may happiness reign in Godzone.
And would be interesting to see who they vote for. My pic is the be kind brigade. Love debates and protests but only when everybody agrees with their ideology God forbide if you disagree. Like a speaker of the house comes to mind. Who has flower of to be at the Irish embassy still sucking on the tax payer dollars
Yep. Buyers at 2016'18 CV levels should continue to wait. Many paths lead there in the next twelve months. Yes some spec paper fortunes will lost. Greed just blinded them to this future.
Vapour equity fumes, just like petrol fumes, just needs a decent spark to create 🔥.
Housing is a terrible investment right now, and even if there are small capital gains coming (I.e. this is the bottom), no one is predicting big growth anymore. The fact that no one thinks it’s a good time to buy is often a good indicator that we’ve hit the bottom.
My personal view is that the bottom will be in when people think housing is starting to look like a reasonable investment again - not a terrible one as you say above.
And turning this ship around won’t be like the post covid era where everyone lost their minds and went on a mindless debt splurge over a period of months with excessive FOMO. This will take years to turn around so nobody needs to be in a rush (in my view).
Yield curves are still inverted so my view is to wait 12 months after the normalise so that you know the bond markets think the future looks better then the present - at the moment the yield curves are still telling the story that our economic future looks worse than the present
The majority of people coming on here are not housing investors, they are people that are very happy living in the house they own or are looking to buy their first home. I'm not interested in buying more houses, I retired before the age of 50, there are plenty of things more important in life for me than trying to own multiple houses and working myself to death.
"Assuming interest rates do go down from here, this could be the bottom of the housing market. "
Sorry to burst your bubble of optimism, but if the NZ housing market did that, then it would be among the very, very few that responded that way after a housing market crash / severe downturn / 'call it what you like' of this scale. History does not favor your optimism. Take care.
With true respect to the currently keen buyers and multi-bagholders.......
No way the bottom is "now in"......who in their right mind? - would buy a 3 or 4% yield and pay 6.5 to 8.5% for the glory of being the latest, useful idiot bag holder?
I while ago, I looked at Debt Loading myself for business (the banks, lawyers, REAs were super keen for me to debt load to the eyeballs) but I know the market, the history, that every mega boom, busts totally. Absolute Totally.
I tested the medium and worst case scenario and projected we are still midbust and walked away.
The Banksters extend and pretend, has ensured, that the worst pain is still to come.
The weakened and lamest of the herd are still "being managed" and going into deeper despair. They should have yanked the exit chain, long ago.
The aforementioned Self Vested Interests.....are really not happy with me, they are starving currently.
- I know I am right to walk away.
As long as you talk with "True respect", even when you mention "being the latest, useful idiot bag holder", and as long as you "know you are right", all is good Gecko.
The problem is that your posts are filled with anger and desperation that belie your words. It sounds like you are deeply stressed. You're not credible!
If you don't deem it idiotic, to take on unsustainable DDDebt ?? that is not backed by a similar yield???
My advice and warnings since 2021/22/23, were wasted on you. (So here we all sit, gazing like a dazed Biden into the abys, amidst the biggest housing market crash since the 1970's)
Ok your call who you take advice from.
Personally, I listen to all views, advice (understand their vested interests acutely) and then back test it. I then dispense with the rubbish or old, out of date models. Look for strong, repeated EARNINGS.
Do you still believe in the multiple rentals, debt stacking, buy more model, is the best going forwards from 2024?
Yvil, is there something in particular you don’t agree with regarding Gecko’s views or is character assassination your only rebuttal?
A more constructive approach would be to counter his narrative with factual evidence. Instead you’re showcasing yourself as a property peddler who refuses to believe when a market is turning.
Grasping the wrong end of the stick, again and again, often gives you a mucky hand. Best you washup Yvers.
Smart people avoid repeating the same mistakes.
The term I used here was: Useful Idiot. A Generic Term/Noun, for someone who has been: exploited/manipulated.
This has triggered you obviously. If you have been exploited or manipulated, sorry to hear this.
Yet we should be stopping others from the perils of becoming a total and utter: Useful Idiot ?
Yes.
Learning and being better person in life is important.
So we can take you further in this journey of learning, let's have: Miriam-Webster, enlighten us all further:
----------------------------------------------------
Miriam-Webster Dictionary:
useful idiot noun plural useful idiots
: a naive or credulous person who can be manipulated or exploited to advance a cause or political agenda
----------------------------------------------------
PS NZ, Todays learnings, DONT TAKE ON LARGE DEBTS, that you cannot service in all cases and situations. Don't be a current bag holders: Useful Idiot. Good and common advice, from avid Interest contributors.
Simple advice, for a less stressed life.
It is quite possible house price falls will accelerate for 12-24 months as interest rates are cut - witnessed this first hand in the USA during the GFC.
Falling rates aren’t guaranteed in the short term to cause house prices to rise - sharp cuts means the economy is a wreck (business failure, rising unemployment, reduced wages, and deflation) and as such, is most of the time, the cause for asset price falls - but because of what happened in 2020 has caused recency/confirmation bias where people assume that as soon as rates are cut, we will be back to the races with everyone gambling with as much debt as possible. I’m pessimistic that this will be the case this time around (of course you could be right and if so, our economy is in the long run going to be even worse as we won’t have cleared out of bad debt ie the whole purpose of a recession = constructive destruction of poor performing debt and businesses).
According to Steve Keen's modelling, lower interest rates won't boost up house prices unless it is matched by an acceleration in the issuance of mortgage debt. So if the economy remains very weak, loan demand is poor and banks also tighten up their lending criteria, lower interest rates won't lift house prices
My wife and I refused to buy into the market in 2021 despite the collective mania and the widespread sentiment that one cannot go wrong with housing.
I enjoy history thankfully and the lessons are clear; it’s a bubble and every bubble pops.
I was here on this forum in 2021 and I determined that you and others were correct in your analysis of the housing market.
I remain convinced today that you and others are correct in stating the market is overpriced and that it is still not the right time to buy.
History also suggests these busts can play out slowly over years… and go hand in hand with a recession.
Smart way to operate SBS..
A few here, obviously have leveraged up to top of their eye sockets (yes, past the eyeballs) and would prefer you become their "Usefull Idiot" and take their BAG and buy at their inflated values of 2021/22/23/24. Many have awoken to this overpriced housing scam, yet some are slow to cotton on.
Wait till the yield makes sense (near the cost of funds) and the Debt is 3 to 5x DTI or so. The lower the DTI, the safer.
Yes every massive BOOM, busts. Completely.
Yes and GDP/productivity is the only thing that allows you to increase the volume of debt once interest rates hit zero. Ie by increasing wages. We can drop rates to zero again while we are in a GDP per capita recession by this doesn’t solve anything - it just makes our future/current predicament even worse. Too much private debt relative to income means the future is bad for the country.
Aren’t you always saying planning rules are all to blame?
Actually there’s a number of factors at play.
Personally I think the cost and availability of debt is by far the biggest factor - as you say above.
I would have said planning rules 15 years ago (pre- Auckland Unitary Plan)
Hi FH, How big is your rental portfolio?
Let you know a little on my previous housing situations:
I have been: Owner Occupier, Boarder, Landlord (not fully my choice) and Renter.
Currently, a happy home owner, with low debt and diversified investments. Not really into Rentierism.
How many rentals do you own, again, Flying High?
Tbh I swear you said you sold your property, maybe a year ago. Does "not really into rentierism" mean not in a big way
I have a rental and am a tenant, I've made no secret of that Crazy Horse I mean nz gecko. My tenant may also have a rental and his tenant also may own a rental. That way we can all be renters as well as home owners, best/worst of both worlds depending on your view
No, Never said I sold property a year ago. You will not find such a statement. Not sure where this was dreamed up from?
Please substantiate your claim?
Glad to hear you put me in the great company of the Horsey one.
I may again reluctantly be a landlord in the future passage of time, nothing can be ruled out in life, as you know.
- Yet it's not generally for me, as I prefer other "productive" investments that do not enjoy extracting from the poorest NZers.
Just not my thing.
Does FH enjoy the extractive economy of Rentierism?
"That's up some $1.323 billion from April and was the largest monthly increase reported since April 2022."
Quick maths: $1.323 billion / $700k mortgage on a new house = 1,890 new houses in May.
Sure, we can quibble about how much a new mortgage on a new house is, but there's not really much going on here is there? Or is there?
Even before the covid boom Auckland on its own was averaging just under 1,000 per month. Nationally it was about double that. It'll slip back from the records set recently in the next couple of years but it's unlikely to slip much below pre-2019 levels. Building the right thing in the right place is still a profitable activity.
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