Kiwis’ home loan preferences revealed

New Zealanders have been taking out fewer home loans, but for larger amounts, according to new data released by the New Zealand Banking Association (NZBA).

The average value of all new home loans issued during the first six months of this year was $382,913, which was 2.6% higher than the last six months of 2022.

However, the number of new home loans issued fell 11.4% to 40,438.

Of those 40,438 new home loans, 26.0% were issued to first home buyers. The average value of these loans was $546,176, which was 11.1% higher than the previous period.

The NZBA also reported that 1.4% of customers were behind on their home loan repayments, while 43.7% were ahead.

 

Borrowers prefer fixed-rate loans

Looking at all outstanding home loans – not just new ones – there were 1.25 million home loans across 1.08 million customers at the end of June.

The average value of these loans was $323,463, which was 2.4% higher than the previous period.

The breakdown between interest rate types was:

• Fixed = 61.5%.
• Variable = 17.0%.
• Split = 21.5%.

 

Term deposit savings rise, credit card spending falls

Meanwhile, the average savings account had a balance of $24,200, with interest rates increasing over the period from 2.42% to 3.59%. The average term deposit held $107,900, with rates increasing from 3.19% to 4.90%.

The total funds held in savings accounts fell 3.4%, while funds held in term deposits rose 8.1%.

The average monthly spend per credit card fell 5.5% to $2,004, while the share of people who paid off their credit cards in full without incurring any interest fell from 67.5% to 65.6%.

 

Help is available for struggling borrowers

NZBA Chief Executive Roger Beaumont said the fact that a large portion of home loan customers were ahead on their repayments while only a small share were behind showed borrowers were generally managing their mortgages well.

“It means that those paying more than their minimum repayments likely built in a cushion in case their circumstances change. It also means they’re paying off their debt faster,” he said.

Mr Beaumont also noted that of the 9,080 customers who applied for hardship status during the first half of the year, 5,655 were given assistance.

“Banks are here to help, and anyone experiencing financial difficulty should contact their bank as soon as possible. The sooner you talk to your bank, the more likely they’ll be able to help,” he said.