The banks' mortgage pile has grown by the biggest amount in the past month since early 2022, according to the latest figures from the Reserve Bank.
The RBNZ said the banks' housing lending stock increased by $1.4 billion in September 2024 (to $359 billion), marking its largest monthly increase since January 2022.
Owner-occupier lending increased by $1.1 billion (0.4%) while residential investor lending increased by $311 million (0.3%).
The housing lending annual growth rate rose from 3.5% to 3.7%. That's still low, but it's increasing again.
And there's no doubt the combination of reductions in the Official Cash Rate by the RBNZ, taking it down from 5.5% at the start of August to 4.75% currently, and ongoing reductions in bank mortgage rates, have had an impact.
Meanwhile, separate figures on non-performing loans show that non-performing housing loans fell, just slightly, in September for the second consecutive month.
And this does appear to indicate that the strong rises in stress seen earlier this year and last year may now be alleviating - again with falling interest rates likely to be helping.
The non-performing housing loans remain at just over $2 billion, which is around 0.6% of the total mortgage stock.
The $311 million increase in investor mortgage borrowing during the month took the investor mortgage pile with banks to $92.148 billion.
The increase in September followed a $335 million increase in August, which was the biggest rise in the investor mortgage pile since May 2021. Such figures barely compare with the $1.266 billion of growth the investor mortgage pile experienced in the super-hot month of March 2021 - but do provide further evidence that investor interest is stirring a little after a long period of this grouping being on the sidelines.
With the RBNZ largely expected to cut the OCR by at least another 50 basis-points in its next review on November 27, this means the OCR will end the year on 4.25% or possibly lower.
What the sharp reductions in rates will do for the housing market as we get into summer will be interesting to see.
11 Comments
Data has shown a decline in property transactions with the rising OCR and a decline in new mortgage applications. The reverse will occur with a drop in OCR. There are confounding factors for sure before I invite a tsunami of comments but the OCR is a leading influence so I don't see news in this. The sun-rising analogy was plagiarised from a post yesterday - mea culpa.
"The banks' mortgage pile has grown" as it will if those who have no Debt sell to those who have to assume it to get a transaction done?
How many of us have acquaintances who have historical property(s) that became mortgage free years ago and are now converting one asset for another - swapping property for cash, in other words. Quite a few, probably.
When the housing market becomes more active/ buoyant, lending grows accordingly……
That means that mortgagors carry more debt which can too easily lead to over-indebtedness - which, in turn, is a bad outcome.
New Zealanders have always been enthusiastic about home ownership and housing investment. Multitudes of people prosper from it - but the message to live within one’s means should never be ignored.
TTP
"When the housing market becomes more active/ buoyant, lending grows accordingly"
Yes and No.
I know of one couple who bought a rabbit infested 250 acre block in Cromwell to establish a vineyard on 30 years ago for $250k. Today they are selling up their now debt-free, rabbit infested block that used to have a vineyard on it (calisivirus came and went) into a challenging market down there for "several million dollars". That sale is likely to involve a mortgage (as it did the vendors back in time) when the new owners have a go at wine making, and whatever it is sold for there will be an increase in the Gross Mortgage Outstanding figure, even if the market slows/struggles/falls in Otago.
The cycle. No mention of the struggles and things forgone to service that original mortgage and survive. The issue today is that income to debt is way out of wack compared to the last owner. Fewer and fewer can affordable to play the game.
We.can always import cultures happy to stack 10-20 per dwelling...oh wait.
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