The value of new mortgage commitments rose 6.9% in September compared with August, according to the latest figures from the Reserve Bank (RBNZ).
The strong seasonally adjusted rise in the figures follows on from the RBNZ’s decision in August to cut the Official Cash Rate (OCR), which has been followed by a further cut in October – taking the rate down to 4.75% from 5.5%.
Banks were already cutting their mortgage rates ahead of the RBNZ’s move to start easing the rates and have continued to do so subsequently.
According to RBNZ’s mortgage by borrower type figures, total monthly new mortgage commitments (these figures NOT seasonally adjusted) were $6.548 billion, up 5.7% from $6.194 billion in August.
The September figure was up 26.1% compared with the same month a year ago.
First home buyers (FHBs) saw a surge in their share of the spoils in September after several months of gradually declining share.
The FHBs, hit a high-water mark of a 25.2% share in December 2023, but this has been declining since and in August the long-since sideline-sitting investors actually got a bigger share than the FHBs for the first time in about two-and-a-half years.
In September, the FHBs and the investors actually took exactly the same amount of mortgage money – $1.379 billion, giving them both a 21.1% share of the overall money advanced.
For the FHBs the share was up from 20.5% in August, which for investors this groupings’ share was down just slightly from 21.2%.
However, the amount borrowed by the investors in September was up a whopping 54.4% compared with the same month last year.
The rise for the FHBs compared with the same month a year ago was a more modest 10%.
The RBNZ said that in total there were 17,298 new mortgage commitments in September, which was up 2.6% from 16,865 in August.
In September 2023 there were just 14,969 commitments.
While the renewed surge of activity from the FHBs in September saw a slight reduction in the share of the mortgage monies advanced to the investors, the latter grouping has definitely perked up in terms of activity compared with recent years.
The last time the investor grouping was getting a share of the mortgage money of over 20% was during the huge surge in activity that started in 2020 after the RBNZ had temporarily removed loan to value ratio (LVR) limits.
This time the incentive seems more the fall in interest rates that’s already been observed plus the likelihood of continued falls in coming months.
