First home buyers piled into the housing market in March, no doubt helped by the lower mortgage rates on offer and relatively stable prices.
The latest Reserve Bank figures show 2943 new mortgages were approved to first home buyers in March. That was up 20% compared to March last year, and was also the highest number in any month of the year since November 2021. See the monthly trend in the first graph below.
However, it remained almost 12% down from the 3347 mortgages approved to first home buyers in March 2021.
Although first home buyers were active over summer, it appears their share of the total housing market declined.
The figures suggest they accounted for exactly a third of the mortgages approved for buyers of residential property in March – i.e. excluding new mortgages approved for the purposes of refinancing of one sort or another.
Their share of those mortgage approvals has hovered around that level since November last year. However, it was down slightly from 36.5% in March last year and 36.8% in March 2023, suggesting their share of the market has slipped slightly.
But although first home buyers have been more active in the market lately, they haven’t been getting carried away on the prices they have been paying for a home.
Interest.co.nz estimates the average price paid for a dwelling by first home buyers in March was $674,000. That figure has been more or less flat for six months, a period in which mortgage interest rates were falling strongly. See the second graph below for the monthly trend.
While first home buyers might remain cautious on how much they are paying for a home, more of them are taking out low equity mortgages, with less than a 20% deposit, to get the key to the door.
In March this year 39.7% of the mortgages approved to first home buyers were low equity loans, up from 30.6% in March last year.
That is also pushing up the average amount of debt first home buyers are taking on to get into a home of their own.
In March the average size of the mortgages approved for first home buyers was $567,448, up from $548,427 in March last year.
Related: The Home Loan Affordability Report for March is available here.
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