First home buyers take advantage of soft housing market

Of the 60,249 new home loans – an increase of 6% from the end of last year – 25% went for first home buyers, who took out an average mortgage of $507,690, up 3%.

In an otherwise steady lending market from January to June, there were a total of 1.4 million home loans lent to 1.2 million customers, up 5.8% from the previous period.  The average loan value was $329,656, up 2%.

By comparison, the average value of all the new home loans issued by banks in the first half of this year, including to first home buyers, was $404,603. That was down 0.4% from the end of December last year.

NZ Banking Association chief executive Roger Beaumont says it is great to see first home buyers taking advantage of the property market and getting into their first home.

The overall value of all new home loans lent by banks increased by 5.3% to $24.4 billion.

About 40.3% of home loan customers were paying more than their minimum repayments, up from 39.4% at the end of last year, while 1.5% were behind on their repayments, a 0.1% decline.

Of all banking customers, 6,515 applied for hardship status, a drop of 26% and more than 6,700 customers were granted that status, down 9.1%.

Around 12,555 home loans switched from principal and interest to interest-only repayments, a drop of 28% from the previous six months.

The proportion of the number of home loans on variable interest rates only, rose by 6.5%, which represented 22.1% of all home loans.

Mortgage holders continued to prefer fixed interest rates, which represented 57.3% of all home loans. The 20.6% of the remaining home loans were on a mix of fixed and variable rates.

Other banking insights for the six months to June included:

• There were 2 billion transactions made by 10.1 million bank customers;
• Cash transactions in branches declined 12.2% to 1.9 million;
• There were 5.9 million customers actively using internet banking or mobile apps, up 3.7%;
• More than 67% of credit cards were paid off in full without incurring any interest cost;
• The total value of term deposits dropped 2.2% to $188 billion, with the average interest rate on term deposits declining from 5.6% p.a. to 4.1% p.a:
• Banks received 6.3% fewer complaints;
• Banks received about 884,000 calls from customers each month.

Beaumont says despite the challenging economic conditions, banks are seeing most customers continuing to manage their money well.