David Hargreaves examines mortgage figures for 2024 and compares figures over the 10-year timeframe that the detailed Reserve Bank data now covers

Numbers of mortgages and the amounts of mortgage money borrowed were both up in 2024 when compared with the previous two years.

Yes, that's not really saying so much, given how flat the housing market was in 2022 and 2023.

But the 21.2% increase in the amount of mortgage money and 14.9% increase in the number of mortgages in 2024, when compared with 2023, suggests a now improving sentiment in the market - though again, off a low base. 

Other immediately noticeable trends from looking at the 2024 figures are that the long-subdued investor category is showing signs of life, while the first home buyers (FHBs) - they've been very strong in a down market - have seemingly reached their limits in terms of overall share of the market.

The Reserve Bank (RBNZ) started publishing a monthly detailed breakdown of new mortgage lending by borrower type in August 2014. This followed the introduction of the RBNZ's loan to value ratio limits in 2013. (Where did the time go?) 

The first full year of lending by borrower type data was, therefore, 2015, which means by the end of 2024 we had 10 full years of the data to have a look at and make annual comparisons.

So, here goes. Ten years of mortgage moves.

One caveat is that the 10 years-worth of figures show new mortgage commitments - which of course might not represent house purchases.

A more recent addition to the RBNZ monthly data series has been the 'new residential mortgage lending by purpose' figures. These break down the new commitments each month into those that were for house purchases, for 'top ups' and for changes of loan provider.

For the record, these figures show that in 2024 of the total $75.261 billion in new mortgage commitments, $46.064 billion (61.2%) was for property purchases, $17.806 billion (23.7%) was for switching of loan provider and $8.615 billion (11.4%) was for top ups.

And if that switching of loan provider figure looks quite big, well yes, it is. Casting eyes back as far as 2020 we can see that switching of loan providers has taken an increases share of total commitments each year, up from 13.5% as of 2020 to that 23.7% seen in 2024.

This is NOT to say though that the overall rises in mortgage commitments in 2024 are simply 'recycled' mortgages. No. The amount of money borrowed to fund house purchases rose meaningfully too. The figures tell us that mortgage commitments for property purchases were $46.064 billion in 2024, up 18.1% on the $39.009 billion borrowed for house purchases in 2023.

So, no matter how we view the latest figures they do show that after the sharp fall off in mortgage business in 2022 and 2023 there were signs of a recovery last year. 

Looking back over the last 10 years, then, what can we say regarding trends? Well, first up, here's some figures:

Just looking at the overall figures both for the numbers and  amounts of mortgages, what hits immediately is how much busier the market was in particularly the 2015-16  -  both by amounts borrowed and numbers of mortgages. 

Mortgages have become much bigger since 2015. The average-sized mortgage in 2015 was (rounded figure) $193,000, but in 2024 it was not far off double that at $377,000 (rounded). After dropping in size in 2023 the average mortgage size increased again in 2024.

In 2015 there were nearly 356,000 mortgages signed up for, while in 2024 the number was much, much lower, at just under 200,000. And that latter figure is actually the highest total for the number of mortgages in a year since 2021.

Another interesting trend visible from looking at the 10 years' worth of figures is the way in which investor participation has sharply reduced and first home buyer participation has sharply increased.

This second table, below, shows the breakdown of who has got what of the mortgage monies advanced on a year-by-year basis from 2015 onwards.

*(Please note that neither this nor the other table further down the article include the fairly small amounts of borrowing 'for business purposes' in the break-out figures so therefore the figures seen for the first home buyers, investors and other owner-occupiers don't exactly add up to the 'total' figures seen, nor do the percentages add up to 100.) 

In 2015 investors took nearly a third of all the mortgage monies, but by 2023 this tally was down to just 17%.

On the other hand the FHB's had a mere 10.5% of mortgage money in 2015, but this rose to 23.6% as of 2023.

It's well worth noting in respect to the figures of both of these buyer groupings that the RBNZ hit investors with punitive targeted LVR measures in 2016 (compelling investors to have 40% deposits at that stage).  In 2016 investors took 30% of all mortgage money that year. In 2017 their percentage slumped to 23.1%.

Conversely, FHB's took just 12.2% in 2016, but this spiked up to 14.3% in 2017 and continued rising from there.

That's until 2024.

Now there are signs investors are stirring once more,  while the  25.2% share FHBs took in the month of December 2023 may prove to be the high water mark for this grouping - at least for now.

The figures for December 2024 (which at over $8 billion of total mortgage commitments were the biggest overall since November 2021) showed the FHBs dropping to a below 20% share of the overall monies committed for the first time since July 2022 - despite having their biggest figure for three years. 

The FHBs grouping still took 21.2% of the mortgage money in 2024, but this was down from the 23.6% in 2023.

The investors having been surpassed by FHBs for the first time in 2022 and again in 2023, were again behind that grouping - but it was much closer. And the investors this year took just on a fifth of the mortgage monies, having failed to hit the 20% mark in four of the five previous years. They just hit the 20% mark (with the help of rounding) in 2024.

The one year in which investors did top the 20% mark during the previous five-year period was in 2020 - the year in which the RBNZ temporarily dropped LVR restrictions from May 1 onwards.

With Labour-led Government measures such as removal of interest deductibility for investors and extension of the bright-line test (IE capital gains tax) now being reversed und the current coalition Government, it will be interesting to see how much more enthusiasm the investors have for getting back into the housing market in 2025. 

The amount borrowed by investors rose $4.486 billion (42.4%) in 2024, while the overall rise in the total amount of mortgage money advanced was of course 21.2%. So, in percentage terms the rise in investor participation was about double the total market.

Of course the amount of money borrowed is one thing, but as stated further up the article, the size of mortgages has increased enormously since 2015. 

So, in some respects its more meaningful to look at the numbers of mortgages taken out.

The intriguing thing here is how consistent the involvement is by the FHB grouping despite the ups and downs of the market. 

The lowest number of mortgages taken out by FHBs in any given year was 21,685 in 2017, while the highest number was 32,493 in 2021.

Anyway, that was another year in the New Zealand housing mortgage market. 

With the signs of revival apparent in the 2024 figures it will be of great interest to see how 2025 develops. We'll be keeping an eye on it.

*This article was first published in our email for paying subscribers first thing Friday morning. See here for more details and how to subscribe.