By David Hargreaves
What a difference a month makes – particularly a month that sees new rules introduced.
There was a more than half a billion dollar drop in the amount of money borrowed by investors for house purchases in the past month, new figures issued by the Reserve Bank show.
October saw the introduction of new tax rules targeting investors both offshore and here, while new RBNZ rules targeting Auckland investors came into effect on November 1.
The latest RBNZ figures show that just $1.717 billion was borrowed by housing investors in October, compared with a bumper $2.239 billion in September, which had been up from $1.989 billion in August.
More significantly, the proportion of lending to Investors compared with the overall lending total for all loans of $5.853 billion, slumped to just 29.3% of the total, compared with 34.4% of the nationwide total in September. It’s the lowest proportion that lending to investors has constituted of the total since last October and the first time the proportion has dropped below 30% this calendar year.
The decline of the investor figures accounted for $522 million worth of the $647 million drop in total lending from $6.5 billion in September to $5,853 billion in October.
Interestingly, the total loaned to first home buyers fell by just $28 million to $672 million in the latest month. This meant that first home buyers accounted for 11.5% of all lending in the past month, up from 10.8% in September and the highest proportion since the RBNZ began publicly releasing these figures in August last year.
The new RBNZ rules that were introduced at the start of this month are limiting Auckland investors to loans of no more than 70% of the value of the property they are buying.
The latest RBNZ figures show that ahead of the introduction of the rules the proportion of high LVR loans nationally has been dropping sharply. In October some 68% of the money loaned to investors was for loans less than 70% of the value of the property acquired. For the same month a year ago the proportion of sub-70% loans was just 48.6% and that proportion remained below 50% as recently as in the June figures.