Mortgage commitments jumped in July as wholesale rates fell

It also said there were 17,442 new mortgage commitments in July, up 19.6% from June and up 26.4% from July last year.

The two-year swap rate fell from 4.96% on June 30 to 4.23% on July 31.

With RBNZ cutting its official cash rate on Aug 14 for the first time since March 2020 to 5.25% from 5.5% previously, the two-year swap rate had fallen to 3.87% on Friday.

In its first release of new debt-to-income (DTI) statistics, RBNZ said 25.8% of the new mortgages had DTIs of more than five times.

“This overall share appears to have trended downward annually with a value of 33% in July 2023 and47.1% in July 2022,” the central bank said.

Of the new mortgage commitments in July, 16.7% of those for first-home buyers had DTIs greater than five times and that was down from 28.6% in July 2023.

The share of total new commitments to other owner occupiers with investment collateral with DTIs greater than five times was 38.9% in July, down from 47.8% in July last year and 63.3% in July 2022.

“The share of new commitments to other owner occupiers without investment collateral with DTIs of more than five fell by 0.9 percentage points this month to 17.3%. This is a large drop when compared to July 2023 where the share was 22.8%,” RBNZ said.

The monthly share of new mortgage commitments with DTIs of more than seven times was 3.9% in July 2024, down from 5.7% in June and from 6.2% in July last year. In July 2022, commitments with more than seven times DTIs was 11.6% of the total.

“The share of new commitments with DTIs of more than seven fell this month for all borrower types, with the largest decrease being for investors which fell 2.8 percentage points from a share of8.1% in June 2024,” RBNZ said.

It notes that borrower gross income is the amount a bank is prepared to count in its servicing analysis and can include the income of more than one person.

The average gross income for first-home buyers was $151,426 in July, down 1.9% from June, while the average gross income for other owner occupiers without investment property collateral was $204,238, a 2.6% decrease from June.

Average gross income for investors was $299,263, a 5.6% decrease from June 2024.