Negative equity is still a concern for the Reserve Bank.
Negative equity is still a concern for the Reserve Bank.
A new government data set shows about 5.2 per cent of New Zealand households owe more than they own at a time when low interest rates have made borrowing more attractive.
As at June 30, 2015, 4.6 per cent of the country's 1.67 million households had a net worth ofbetween and negative $100,000 and 0.6 per cent were in even deeper negative equity, Statistics New Zealand's household net worth figures show.
The report is the first of a new series, which the agency last touched on during a longitudinal study through the last decade.
While not comparable on a like-for-like basis, the earlier series shows fewer than 50,000 of New Zealand's 975,000 families were in negative equity in 2004, while 6 per cent, or 22,900, of individuals living alone and 43,800 living with others owed more than they owned.
Negative equity was a major concern for Reserve Bank governor Graeme Wheeler when he imposed restrictions on bank lending with small deposits in 2013 in an effort to avoid the harm caused by the sub-prime crisis in the US in 2007 where aggressive lending left many households under water.
Those restrictions immediately saw a drop-off in first-home buyers, though Reserve Bank figures showed those purchasers accounted for almost half of the $496 million of high loan-to-value ratio mortgage lending last month.
In June 2015, first-home buyers made up 38 per cent of $462 million of mortgage lending where less than 20 per cent of the purchase price had been offered as a deposit.
Since then, mortgage rates have fallen to a one-year fixed rate at 4.38 per cent as at June 24, compared with 5.15 per cent a year earlier.
