By David Hargreaves
First home buyers enjoyed a record high share of the mortgage money handed out by the banks in December, according to the Reserve Bank's latest monthly borrowing by lender type figures.
The latest figures do emphasise the big drop-off in house buying that occurred in December as highlighted by the recently released Real Estate Institute of New Zealand figures for the month.
However, the overall tally of mortgages advanced during the month, at $5.371 billion, is in fact up about $300 million on the same month a year ago.
It is, however, down by around $850 million from the amount of mortgages advanced in November.
The FHBs have been gradually building their overall share of the borrowing the in past year - as well as borrowing increasing amounts in actual dollar terms.
In the latest month the $924 million borrowed by the FHBs accounted for 17.2% of the total advanced by the banks, which is a new high in a series that the RBNZ has now been publishing since August 2014.
One noteworthy point in the latest figures is that the RBNZ has issued a "special note" on the figures.
Since October it has been noticeable that the overall share of mortgage money going to investors has dropped sharply, from somewhere just above 20% to around 17.5%.
However, the note, dated January 29, says that In October 2018, a "major bank" made a reclassification to their ‘commitments use’ reporting.
"This resulted in a reclassification from “investor” to 'other owner occupied'. The series now show a lower amount of “investor” purpose loans from October 2018 onwards. This impacts both the C31 and C32 tables," the note says.
The RBNZ doesn't say which bank has reclassified its loans or what the specific impact is on the figures.
The mortgage figures from January onward will be watched with a great deal of interest, as the RBNZ has relaxed its loan to value ratio (LVR) restrictions from the beginning of this month.
A similar move in January last year did seem to have an impact, particularly in respect of more FHBs coming into the market.
79 Comments
You know, because it has been stated before ....
A migrant with a pocketful of loot who has never bought in NZ before is a FHB
An NZ local native buying their first home (anywhere in NZ) is a FHB
So who are these FHB's you talk about? All local strugglers? Wishful thinking
Losers and Doom Gloom Merchants, not content to be paralyzed by their own fears, trying to project them onto others and can't stand to anyone succeed. I just sold the first rental I bought waaay back in 2015 for double what I paid for it, OR a 500% profit on my 20% deposit. Of course I would never have bought anything if I had listened to the Losers who have been predicting doom and gloom for eons. Some of the names change, but the message does not. First rule of getting ahead is "Stay away from the Losers"
What a load of projecting nonsense.
I have no desire to buy a house here, and I don't begrudge anyone who has made money in this real estate bubble. All I take issue with is this notion that it will last forever when every economic indicator suggests it's completely out of whack with all other metrics.
Face it, you had no idea what the market would do in 2015, you made a risky gamble and it paid off. That doesn't mean anything.
You have no market insight. You took a gamble, it paid off well for you, and now you're trying to use that as truth that you're clever or have divine providence.
Price-to-rent ratios are insane
Price-to-income ratios are insane
We're a tiny market in a tiny economy vulnerable to bad economic weather, it's a high risk situation for a new property investor in this place in time, in this place on earth. If you think that's Doom and Gloom then I have some lottery tickets to sell you.
Woahhhh. Somebody has some deep rooted issues they need help dealing with. I get there's a bit of banter on this site, but your personal attacks against strangers on the internet are next level.
May I suggest investing some of your capital gains on some counselling sessions?
Nzdan, what about all those innuendos you post. You know, the ones aimed at those liberated themselves from debt? It seems not to matter how hard commentators might have work for it, you seem to have a problem with it.
One is left asking, how successful do you REALLY feel.
I called you Whistle Tooth and posted some little "old man" parody of your incessant need to criticize anyone who has a mortgage as being foolish. I guess it had the desired effect because it got you riled up, so I feel very successful.
by Nzdan | Mon, 28/01/2019 - 11:44
up1
I think RP is trying to wish a little bit of misfortune on to you."These greedy little whippersnappers with their Interest Only mortgages making a profit at the expense of my Term Deposit rates, by golly they'll get their comeuppance just you wait. They don't call me Retired "Schadenfreude" Poppy down at the bowling club for nothing."
He's probably got a severe case of Whistle Tooth going on as well.
Nzdan, deep down, how successful do you really feel? Anyway, I repeat, my issue is with interest only loans derived from speculation enduring in a clearly weakening RE market. Perhaps you are entering a state of debtors paranoia as you've once again wrongly assumed my criticism was aimed at you ;-)
If your mortgage happens to be an interest only one, don't take it out on me. Try diverting your energies towards LIBERATING YOURSELF! Where interest is concerned, it's better to receive than to give. Trust me.
Feel very successful. Why, are you trying to sell me something?
No paranoia here, I was having a discussion with Yvil on Interest Only mortgages and once again along came Rhetoric-Poppy to derail the thread so I mocked you for it. I've mentioned my mortgage details on here before, it's $160k P & I.
On the contrary, it is my ability to change my mind when the facts change or even when the facts haven't changed but my understanding changes aka learning, that has caused me to achieve. There are people on this site who have been expecting a housing crash since 2009 or earlier, and they still believe they are right.
Correct as Warren Buffett said READ the market and decide if want to make money in share market or even housing market.
Currently anyone can see that housing market is on downhill and will not be long before the media and powerfull lobby admits - for how long can one do sugar coating as soon data will catch up.
Nah I left home at 16 spent my teenage years drunk and on drugs, then I grew up got married, had kids, saved money, put it into farmland and eventually a couple of rentals paid cash for a lifestyle block and chilled out for a couple of years. Now I'm going more into farming which is why I need the cash from my rentals only made 130k this year, should more than double that to 300k next year.
Of course I could have complained about life handing me lemons, or four aces is too risky etc.
Well said Skudiv the reality of life is in some minds ' the time is never right ' and negative thoughts override logic and decisions are not made. There is always something bad on the horizon to focus on if you look for it. Do your due diligence, don't over commit, work hard to pay down the debt, this a combination that has returned great returns over time.
Shoreman, your favorite Fund Manager (Milford) has fallen out of love with Auckland housing as it will follow Sydney - down. Is it time to ditch all those interest only loans perhaps?
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Its an indictment on our economy that many specufolk such as yourself and Yvil are STILL hammering away at an expiring investment strategy (interest only loans), believing future results will always match the past.
What say you now?
In Housing bubble many made money and lucky for you but also many have / are loosing money who bought in 2016 onward on high price and are now trying to sell but are not getting what they paid 3 years ago.
So anyone who has been buying and selling for number of years and have made profit in few transaction and lose money in the last transaction is fine as overall made profit but those who entered at last stage of the boom are …….specially if they do not have holding capacity.
In May, Sept, October and Dec 2018 FHB made up >10% of the Number (not $) of the mortgages. (For 2018 they made up 16.2% of the $ value)
And the FHB average mortgage value has tipped over $400k again. (Also May and Jan 2018, and July 2017)
Not quite hitting the record, but 32.07% of those mortgages to FHB were >80%LVR.
I hope for their sakes the market doesn't tank, and only stagnates for the next 8 years or so.
...agreed. It would have to stagnate for at least eight more years to return to anything near sound fundamentals. There has to be no global shock of significance within the said eight years too. Given mans remedial achievements since 2008, Such a scenario is looking rather impossible.
Fear psychologyof FHB and best exploited by estate agents and media (influenced by powerfull rich lobby) by trying to hide the truth as even mentioned in the article below that vested interest / media sugar coat the truth to try and misguide and FHB entering the market at this last stage will be hard hit.
This is the time to believe in 'Patience is virtue'
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
In November / December all real estate agents were down - feeling low but in January in new year are very hopefull and have come out with positive attituted - It has to be wait and watch if their attitute will prove to be right or......
In December for a house in Farm Cove agent was encouraging any buyer in mid 900s and in January has raised the price 1050000 and will be hoping to get a million and this positivity is with most real estate agents.
Febraury / March will be the deciding factor - direction of housing market in NZ.
Game on
Correct FHB should buy house as is good for long term but now having already miss the boom, is the time to wait and watch instead of rushing atleast for first quarter of 2019.
Also for FHB to make money in next move will depend on what price they buy and anyone can advise that now is the time to wait and watch atleast till April (Definitely all FHB should buy and enter property market and not wait endlessly but waiting for few more months now will do no harm instead may help as price may go Down but will definitely not going up)
"This resulted in a reclassification from “investor” to 'other owner occupied'. The series now show a lower amount of “investor” purpose loans from October 2018 onwards.“ - What kind of witchcraft is this? And for what purpose?? All it’s doing is skewing the data.
You beat me to it, I was just trying to see what percentage of the lending was for investments and stumbled across that foot note. Amazing how a bank can redefine what i would think are fairly obvious meanings. "Owner occupier" doesn't really seem that fuzzy to me.
I'd wait a little if I was a FHB.. may be 'til end of the year to get a better picture
https://mobile.nzherald.co.nz/business/news/article.php?c_id=3&objectid…
Seriously, I can see why so many on Interest.co are able to moan about how high house prices are in Auckland especially!
While you have been on here moaning and hoping prices tank, investors and homeowners have been making millions!
Reality is that house prices are just fine in most parts of NZ and is a great country apart from our current government that will be gone next year,
If you think 9 times income or thereabouts, third highest in the world, is just fine, good luck to you. Not a great time to invest, or to be a FHB. The steep upward trend of capital gain is behind us. Yes, if you missed that, or haven’t taken profit off the table yet, well...
20 years investing in general but not only property. I don't like NZ or Oz property right now (or for the next few years I'd say), as I've said, they are bubbles - Australia's is bursting as we speak. Have owned property in both countries, still do in NZ. I think most share markets are significantly overvalued too (but still own some stocks not bought recently). The sidelines of property and shares have looked good to me in recent times, until assets look undervalued, which could be soon for some. It doesn't mean I've been idle in terms of investing though.
My latest CoreLogic figure is 94.78% of 2017 CV, but paradoxically a local leafy suburb house on the market since October (way overpriced) just sold for 113% of its 2017 CV, a 7% uplift on its 2016 sale price. Evidently there is still money out there and it pays to be patient, if you have the right property.
The main problem is that not all CVs are created equal...they are a excel spreadsheet driven analysis with limited actual application to the real market (as well as being backward looking).
It is a proportioning exercise for rates yet we rely on them so much for back of the envelope value analysis. I forecast that the sale prices achieved will be all over the spectrum in terms of % relative to CV for the next couple of years...I have already seen 10 - 20% under CV for some properties and others at 10 - 20% above...
There are usually reasons for those variances. Saw one go recently for about 25% under RV.. pretty good for a leaky rot box. Another one that was coming up in my searches was asking $550k under RV of $1.2m and didn't get any bites as far as I know, but a three story leaky rot box on a steep section isn't going to move in a hurry, since it's probably cheaper to demolish and start again.
"they are a excel spreadsheet driven analysis with limited actual application to the real market"
The modern day equivalent to the "Calculator?! No way, he just works it out with a pencil and pad".
You will be happy to know that no, the valuations are not based on an "excel spreadsheet driven analysis."
Foreign buyers gone, speculators arms tied and hitting the ejection handle, immigration falling, house shortage shown to be fabricated, and the winner is....fhb yeah right. Sales volumes are tanking...more so fhb aint saving anything. Aussie has set the pace...down...and the little brother is following. Even cheerleader herald is printing that story.
2019 is going to be the year a lot of agents sell their cars and stop eating squashed advo as sellers refuse to accept reality. The big change will be when the banks tighten the lending lolly scramble. Anyone buying this year must really really need that house, and some will.
Sales to continue to thin, and drop in dollars (agents don't really care about you sale price...just that it sells). Expect agents to be getting training in how to "condition" sellers down, just like 2008
Queenstown is slowing: https://www.odt.co.nz/regions/queenstown/clamps-sales-slow-queenstown
And "Development and humans are the problem." in Queenstown's water quality woes. Yes folks Queenstown does have water quality issues too. https://crux.org.nz/community/weve-not-done-enough-things-need-to-chang…
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