Bank mortgage lending on target to be the biggest since the pandemic

September Reserve Bank figures show although total housing lending at $1.8 billion during the month was down 0.5% from $2 billion in August, the annual growth rate was up from 5.6% to 5.7%.

The total mortgage book stood at $379.3 billion by the end of September this year.

Lending on housing stock is poised to double that of last year. During the first three quarters of this year mortgage lending by banks surpassed $15.2 billion. For the first nine months of lastyear lending reached $9.3 billion.

If the lending figures remain on track, it could be the biggest increase in mortgage lending since the Covid 19 house buying spree in 2021.

Leading September’s increase on a percentage basis were investors, outstripping owner-occupiers by 0.3%. Their share of the total mortgage lending was 0.7%, although the rise was only $699 million. In comparison owner-occupier lending rose 0.4%, equating to $1.1 billion.

Of the total lending, including consumer lending, $368.2 billion is being repaid by principal and interest, $138.6 billion on interest only and $72.8 million on revolving credit. 

Home building recovery gradual 

As mortgage lending increases and it is still a buyers’ property market, the beleaguered building industry could be about to rise from the ashes of a prolonged downturn.
Housing consents in December rose 7% in September, the third straight month of strong gains.

Statistics NZ data shows 3,747 new residential consents were issued throughout the country in September, which was up 21.7% compared to August and up 27.3% compared to September last year.

It was also the most new dwelling consents issued in any month of the year since November 2022.

The total estimated value of building work on new dwellings consented in September was $1.611 billion, up 22.1% compared to September last year.

While it is still early days in the recovery, Westpac senior economist Satish Ranchhod says with big reductions in interest rates working their way through the economy, the bank expects the recovery will strengthen over the coming year.

Much of the consents increase is in apartments and townhouses. “With such consents often issued in batches, we could see some drop back in October. Even so, the underlying trend is looking more positive than it has for a long time.

The total number of homes consented over the past 12 months has risen to just shy of 34,900.  The annual total has been gradually rising for the past four months, with Auckland driving much of that increase. Wellington has also lifted off its lows.

After falling sharply through 2023 and 2024, homebuilding activity has been tracking sideways since the start of the year, but Westpac doesn’t expect a significant turn-around through the final months of 2025.

Ranchhod expects consent numbers will continue to rise and homebuilding activity will lift over 2026.  However, it’s likely to be a gradual rise.

“While low interest rates are supporting new development, population growth remains low and there have been sizeable increases in the housing stock over the past few years, which is still weighing on house price growth and will also be a dampener on the pace of home building.