New mortgages rose more than 36% year-on-year in February, to $ 7.6 billion in loans, according to new data from the Reserve Bank.
The amount loaned to homeowners is also up from January. While January lending was down from the last three months of last year, it was the busiest January since 2014, when the records began.
Investors borrowed $ 1.8 billion on February loans, up from $ 1.1 billion last February. Their share stood at 24.4% of total loans, up from 20.3% last year but down from 26% in January.
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First-time homebuyers were responsible for $ 1.1 billion, up from $ 938 million last year. Their share of total loans was 15.6 percent, down from 16.8 percent last February and 16.2 percent in January.
Kelvin Davidson, senior real estate economist at CoreLogic, said February marked the sixth consecutive month that the annual change had been at least $ 1.6 billion, with December’s rise reaching over $ 3 billion.
It’s no surprise that the Reserve Bank’s statistics on overall mortgage lending activity are strong again in February, he said.
“But the numbers also show that lending to high loan-to-value ratio (LVR) investors has slowed quite sharply so far in 2021, even though official rules only resumed on March 1.”
The banks had moved ahead of the Reserve Bank to impose stricter LVR rules before the official start date and the results were evident in the data, Davidson said.
“This shows that the dollar value of loans to high LVR investors has weakened so far in 2021 and that the share of this global activity has fallen sharply from 15 to 16% in September-December to 11%. now.”
While the government would be delighted to see this slowdown in high LVR lending, Davidson said he suspected there would be more restrictions ahead for investors in the form of limits on interest-only loans.
The share of interest rate-only investor loan flows had already declined over time, from a high of 55% in 2015-16 to around 40% today.
But that was probably still deemed too high by authorities, he said. “It wouldn’t be a surprise to see some sort of speed limit introduced. For example, maybe only 20% of investor loans on interest-only terms. “
The Reserve Bank was due to make a decision on the matter in May, Davidson said.
Any other restriction for investors would be in addition to the measures recently announced by the government to control investor activity and slow down the housing market. These include the extension of the clear line test and the end of interest deductibility.