Banks report big increase in mortgage lending

In a sign of how property market conditions improved during 2023, significantly more consumers took out home loans in the second half of the year than the first, according to the latest data from the New Zealand Banking Association (NZBA).

Borrowers committed to 52,504 new home loans (which did not include top-ups of existing loans) between July and December, compared to 40,438 new loans in the previous six months – an increase of 29.8%.

NZBA CEO Roger Beaumont said this increase was surprising given the high cost of living. “It shows activity in the market is holding up despite the cost of borrowing rising to help combat inflation and many New Zealanders experiencing financial challenges. It also bucks the downward trend in the previous six months, when new home loans were down around 11%,” he said.

Of those 52,504 new loans, 26.3% were for first home buyers, compared to 26.0% in the previous six-month period. First home buyers' average loan size was $476,919, which was 12.7% lower than the previous period.

“This shows that first home buyers make up a good proportion of new home loans and, due to housing market conditions, they don’t need to borrow as much as previously, which is good news for people getting into their first home,” Mr Beaumont said.

Focusing on all loans – both new and existing – for all borrowers, the average loan size was $372,083, which was 2.8% lower than the previous period.

The breakdown on interest rate type was 61.8% fixed (was 61.5%), 16.7% variable (was 17.0%) and 21.5% split between fixed and variable (unchanged).

The share of borrowers ahead on their mortgages fell from 43.7% to 41.4%, while the share behind on their repayments remained at 1.4%.

It’s great to see growing numbers of first home buyers entering the market. Please introduce me to anyone you know who’s thinking of buying their first home. I’ll be happy to explain how the process works and manage their loan application from start to finish.