Mortgage borrowers are so confident interest rates will come down even further this year, nearly half the mortgage money borrowed in November was on floating rates.
Residential lending totalled $7.6 billion, up 1.2% from $7.5 billion in October and up 21.8% from $6.2 in November 2023.
RBNZ data show of the total residential lending 47.4% of the lending was taken out by borrowers on floating interest rates. In other words. lending on fixed interest rates dropped to 52.6% - the lowest since the survey began in April 2021.
Borrowers started taking out new mortgages and re-fixing existing mortgages on floating and short-term fixed interest rates when the RBNZ started cutting the OCR in August of last year.
The OCR now sits at 4.25% and when the RBNZ next reviews it on 18 February, economists expect a further cut of 0.50-0.75%, particularly as business confidence has reached its first positive outlook in three years and is at the highest reading since 2017. It has lifted 50 points since August.
Kiwibank economists Mary Jo Vergara and Sabrina Delgado say the business outlook has improved but the here and now demands further rate relief from the RBNZ.
In the central bank’s latest figures, new home owner lending dropped by 0.3% to $5.2 billion in November, with a definite preference for shorter term lending.
Owner occupier lending on floating and short-term fixed rates (up to one year) soared to 9.34% of new lending.
Terms of 18 months plus accounted only for a combined share of 6.6%.
The share of owner occupier new lending on floating terms increased by 18.6% from 27% to a 45.5% share, a historical high since the data series began.
New lending on a fixed term one-year accounted for 32.6% of all new lending, down from 41.9% in October.
New residential investor mortgage lending increased to $2.1 billion in November.
Floating terms accounted for 50.8% of new lending, up from 29.3% in October – an historical peak.
The share of new residential investor lending dropped for all terms except for floating rates.
New residential investor lending on one-year fixed terms declined by 13.2% to a 31.4% share.
In November 99% of investor new lending was on floating or at fixed rates up to two years.
Within commercial property lending, residential property development increased by $10 million, or 7.1%, to $151 million; commercial property development dropped by 26.6% to $94 million; and investment property rose by 1.6% to $814 million.
Total new business lending (excluding agriculture) was $4.4 billion in November, up 34.4%
from $3.3 billion in October. Annual comparison shows an increase of $1.5 billion, or a 49.5% increase, from November 2023
New consumer lending declined by 3.8% to $229 million in November, down by $11 million, or 4.6% on October.
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