There is no holding back in the market uplift as data for Jan-Feb 2020 reveal that not only has borrowing increased with First Time Buyers and Investors, but listings and sales activity has also shot through the roof in February.

Here’s what you need to know:

First Home Buyers Borrowing Increased in last year

According to new figures released by the Reserve Bank, 19% of new residential mortgage lending went to FHBs in January at a record figure of $889 million – up 27% from January 2019.

What is interesting about this, is just how significant the increase FHBs have been taking in mortgage lending since the RBNZ’s data series started in 2014, when around 10% of new mortgage lending went to FHBs. But this month’s increase to 19% was a considerably bigger jump compared to the increase in total mortgage lending across all borrower types, which was up 16% to $4.71 billion.

The recent low mortgage rates and the clear indication that they may not reach any lower has caused a significant increase of sales and activity in the market since November. Many will be watching to see whether the RBNZ will change LVR restrictions when it releases its next biannual Financial Stability Report on May 27, but with the current healthy success the market has seen, many are predicting the RBNZ will leave the restrictions as is.

But it’s not just first-time buyers who have had increased activity, Investors accounted for a fifth of new mortgage lending – the highest portion since September 2018 at an impressive 31% more in January 2020 ($951 million) than they did in January 2019. This will be music to the ears of the Reserve Bank whose main target was investors when they lowered the LVRs. It seems the pull-back this group had from the market since the change of leadership in the 2017 election.

More Properties on Offer as Activity Increases

According to residential property auctions monitored by interest.co.nz, there was a significant nationwide increase in properties being offered by auction (25% compared to last year) and the number of properties that sold (35% compared to last year).

In Auckland specifically, the country’s largest auction market, activity was also well up compared to a year ago at 19% compared to a year ago for listings, while the sales rate increased from 35% last year to 52% this year.

This increased activity was backed by data from Barfoot & Thompson’s auction rooms, where the agency marketed 187 properties for sale by auction in the week form 17-23 February and sold 122 of them, giving an overall sales rate of 65%.

Many will be watching to see if this increase activity continues into the final months of summer as we head into March, and if it could even potentially carry through winter.

-Ravi Mehta