By David Hargreaves
A new high water mark was set last week both for the amount advanced in mortgages and for the average size of those mortgages.
The Reserve Bank's 'experimental' housing loan approval series shows that mortgages totalling $1.679 billion were approved in the week ended March 4.
That surpasses the previous record of $1.591 billion set as recently as the week ending December 18, 2015.
However, in the December 18 week there were some 7777 mortgages approved.
In the past week there were just 7096.
This gave an average amount per mortgage of $236,600, which is an all-time high.
The surging mortgage sizes and overall amount approved comes at a time when the RBNZ has put in place new limits for Auckland investors aimed at taking some of the heat out of the Auckland market.
Recent sales data, particularly out of Auckland, have suggested that the market has indeed dipped recently, but it's not yet clear whether this may in part have been due to the market having something of a 'pause' after there was a surge in activity ahead of the November introduction of the new measures.
The RBNZ has indicated it wants to see February and March sales data before starting to reach conclusions on the effectiveness of the new measures.
The fact that mortgage approvals remain so strong will give the RBNZ plenty to think about ahead of its decision tomorrow on interest rates.
The central bank is expected to leave the Official Cash Rate at 2.5%.
However, because of the relative absence of inflationary pressures, the RBNZ is coming under increasing pressure to lower the rates - and it is widely expected to open the door to such reductions in tomorrow's statement.
A big concern for the RBNZ, though, would be what further rate reductions might do in terms of further fuelling the house market.
Mortgage approvals
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18 Comments
NZ property investors filling their boots in the regions in response to 4% mortgage rates. Plain and simple.
Auckland over last few years has been a chinese dirty money story, NZ property investors have been sitting scratching their heads as their equity sky rockets but not motivated to buy into auckland due to pathetic yields - Now they're buying in the regions as its too easy to buy a 7% yielding property in P.N, borrowing the lot at 4% against large equity gained over past decade
I am in Chch - I've looked at a couple of rentals that appear to have a new coat of paint (done badly, one the leaves of the bushes had been painted as well and one of the bedrooms had no light fittings - there was a light switch but I suspect the hole for the cable had been plastered over - strange there was no picture of that room on the TradeMe listing) - but neither would I be temped to buy. More interesting was why were they selling....
Yes and the real people that are going to get hurt are the NZ Citizens and residents, with families that have been desperately trying to get on the the AKL housing market. Once the AKL property market bubble has finally burst there's going to be a lot of home negative equity and property repossessions from the banks. I witnessed this in the UK a few years ago and I do not want to see it happen here!
And has anyone noticed that Hong Kong residential property market has dropped by -70% recently, is this not in anyway a bit of an eye opener of things to come considering how dependent we are on Asia (And particularly China).
We mightn't be any good at cricket but we can sure show those Aussies how to ramp up a bubble. Take that learners - yeah, suck it up losers.
"Home loans in Australia fell more than expected in January, indicating that even with record low interest rates some steam may have gone out of the property market."
http://www.ft.com/fastft/2016/03/09/australian-home-loans-fall-more-tha…
Did this article stem from my comment about non-resident cash buyers shrinking the money supply? Anyway it appears my assertion that the double whammy effect is creating a non productive asset bubble that driving up the cost of borrowing for resident buyers. Sure to end well.
One statistic I would like to know David, if you have the time, is the percentage of residential mortgages against the M3 money supply. It varies a bit and was dropping, which is a counter to my assertion.
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