Mortgage borrowing grinding to a halt

Spring may be on the way – but it’s pretty darn chilly out there in housing land.

The latest sector lending figures from the Reserve Bank (RBNZ) show that – barring the April lockdown month of 2020 – we’ve just seen the slowest month for growth of the country’s mortgage stock in five years. The RBNZ also provided this summary.

The total stock (this is for both banks and non-bank lenders) increased by just $848 million in July (to a little over $340 billion worth of outstanding mortgages).

And you have to go back exactly five years to 2017 to find a month with slower growth – barring the lockdown month.

And of course lending bounced back pretty quickly after the lockdown.

In fact by March 2021 we saw a peak monthly growth in the mortgage stock of over $3.7 billion.

Since then though things have been cooling rapidly.

The annual growth rate in the total amount of outstanding mortgages peaked at 12.1% in July last year – but since then has been declining each and every month.

The annual rate of growth as at July 2022 stood at 6.2%, a sharp drop from 6.9% just a month earlier.

In a separate breakdown of figures just for the banks, the RBNZ said that in July the total bank housing lending stock increased by $753 million. 

Residential lending to investors was in total actually down by $10 million, highlighting the fact that investors have been heading for the sidelines.

Outside of residential lending, the RBNZ reported that total business lending stock increased by $221 million in July 2022, with its annual growth decreasing from 8.6% to 8.5%.

“Annual growth has been trending down from its peak in May, which was the highest annual growth rate since February 2009,” the RBNZ said.

Total agriculture lending stock was up by $192 million in July 2022 but on an annual basis the stock decreased by 0.7%.

Separate RBNZ figures released for bank deposits showed that household term deposits continued their resurgence – in line with the rising interest rates.

The total amount on term deposit increased by $2.7 billion in July to a total of $93.8 billion and this tally has risen by over $10.5 billion so far this calendar year.

However, transaction and savings balances that thrived during the Covid lockdown days are now out of favour.

In July household transaction balances were down by $1.2 billion (to $50.4 billion), while savings balances dropped $676 million (to $79 billion).

There was though an overall growth in total household deposits of $815 million. The RBNZ provided this summary of deposit data.