Mortgage demand drops as property market slumps further

Significant drops in mortgage demand were seen in places hit hard by severe weather events. Photo / Supplied

By RNZ

Mortgage spending continues to plummet as home-buyers across the country sit on the sidelines of the slumping property market.

Equifax New Zealand’s consumer credit demand index for the three months ended March shows overall consumer credit demand fell 6.2 percent from a year ago, to its lowest point since the first Covid-19 lockdown in 2020.

Meanwhile, mortgage demand plunged by a fifth compared to a year ago.

Managing director Angus Luffman said mortgage demand fell for the seventh consecutive quarter and he expected the weaker housing market to continue well into the second half of the year.

“The mortgage demand has really come off since early 2021, so it has been progressively declining,” he said.

“It’s softer again in terms of overall volumes in the first quarter this year after stabilising over the course of 2022.

“We expect that will mean a softer market over the coming quarters.

“Consumers are really circumspect at the moment and you’d expect that. Taking on new commitments when you’re in a circumspect environment is something people will be doing less.”

In the regional breakdown, significant drops in mortgage demand were seen in places hit hard by severe weather events.

The largest declines were recorded in Nelson (-29.5 per cent), Gisborne (-26.2 per cent) and Hawke’s Bay (-23.9 per cent). That compared with the nationwide figure for mortgage applications down by -19.6 per cent year-on-year, which is now at the lowest point since the Index began in 2019.

Meanwhile, unsecured credit applications comprising credit cards and personal loans eased up 0.7 per cent year-on-year across the country.

Despite the dip in consumer sentiment there was an ongoing appetite for credit cards. Card usage was up 18.7 per cent, boosted by spending on travel.