Banks’ approval mortgage ratio at 3:1, as Labour claims disparity shows Auckland is a ‘speculators’ paradise’.

New Zealand banks approved three times as many mortgages for investors as they did for first home-buyers over the past year, Reserve Bank figures show.

Since August last year, when the dataset began, the share of total lending which went to first-home buyers has remained the same, at around 10 per cent.

The proportion of lending to investors has risen over that time, from 29 percent to 33 per cent.

The largest share of new mortgages went to existing owner-occupiers moving into another home.

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Around 60 per cent of lending went to this group, which was given loans worth $19 billion in the first half of this year.

The Labour Party says the disparity in lending is further evidence that Auckland's housing market has become a "speculators' paradise".

Mortgage lenders say speculator activity is growing rapidly ahead of October rule changes, which will require investors to pay larger deposits on residential property.

Auckland's housing market has become a 'speculator's paradise', says the Labour Party. Photo / John Borren
Auckland's housing market has become a 'speculator's paradise', says the Labour Party. Photo / John Borren

The Reserve Bank's lending data showed that in the first half of this year, banks approved 31,123 home loans for investors and 9,890 for first-home buyers.

The average loan size was also larger for investors. Over the past six months, investors were given an average mortgage of $331,427, compared with $317,796 for first-home buyers.

A small share of residential mortgages - around 1 to 2 per cent - went to businesses.

"The figures demonstrate just how rampant property speculation is in Auckland," Labour's shadow housing minister Phil Twyford said.

"For every mortgage to a young family or first home buyer, banks are lending three mortgages to investors and landlords.

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"While there are a number of factors that got the housing market into this state - lack of supply, planning rules - actually the speculative pressures are so huge now I believe that they're driving much of the inflation that we're seeing."

Mortgage specialist Bruce Patten, of Loanmarket, said that the figures "matched his experience", and possibly even underplayed the prominence of investors in the market.

"I wouldn't say it's necessarily at the expense of first home-buyers but it's certainly in competition with first-home buyers," Mr Patten said.

The proportion of loans going to investors appeared to be increasing as property speculators rushed to buy or sell in Auckland before lending rules were tightened in three months' time.

"June was the biggest month ... the banks had ever seen in terms of processing mortgages," he said.

"The numbers are horrendous at the moment. The banks are running at absolute capacity." From October, investors will need to have at least a 30 per cent deposit if they are buying within the Auckland Council limits - a move which could make the market more accessible for first-home buyers.

The Reserve's Bank's data showed the policy could potentially have a significant impact. Nearly half of the investors who were approved for new mortgages in June had a deposit of less than 30 per cent.

Prime Minister John Key said yesterday that the main housing issue in Auckland was lack of supply. He said the Government was aiming to quickly boost supply through its fast-tracked housing areas, and was helping New Zealanders into housing through the Homestart package.

Homestart subsidies were expanded in April to a maximum of $20,000. The scheme had not yet made an impact on the total number of first home-buyers getting a mortgage, which has remained level for the past three months.

The Government is also planning a "bright line test" in October, which will introduce a tax on homes bought and sold within two years.

'It's easier to borrow if you already have a property'

Property investor David Han says the 'toughest part' for any property buyer would be getting a loan to buy their first property. Photo / Nick Reed
Property investor David Han says the 'toughest part' for any property buyer would be getting a loan to buy their first property. Photo / Nick Reed

Property investor David Han says it is easier for those who already own properties to invest in more.

Mr Han, an accountant, started investing in properties 10 years ago "when prices weren't that crazy".

Over the period, the 44-year-old has bought and sold five properties, has recently acquired one in Manurewa and is planning to build one on land he owns in Albany.

"Banks require security, when you already own properties it makes it easier to get a loan than someone who has nothing," Mr Han said.

He said he chose to invest in properties because it was "simple" and "straightforward", unlike other forms of investments.

"To invest in shares or business, for example, banks will look at income projections, business plans ... it's harder to get the bank's money," he said.

"When it comes to property, it's a lot simpler and easier to borrow money because the property also provides better security for the bank."

Mr Han said the "toughest part" for any would-be property buyer would always be getting a loan to buy their first property.

Kristy Chee, who became a first-home buyer last week, says it is "incredibly difficult" to buy a property in Auckland.

The 33-year-old social worker and her management consultant husband managed to get the house only after going through about 50 houses in the past six months.

"We started looking in January, and properties were just going way above CV and way beyond our budget," Ms Chee said.

"They were going for $200,000 over CV and the later it got, the market seems to have gotten away from us just within a few months."

At one auction, she lost out on a property which eventually sold for 54 per cent more than the CV.

"For us, it became incredibly frustrating and difficult, there was just lots of competition."

The property they bought was a three-bedroom house in Onehunga, costing $825,000 - which she described as a "bargain".

Ms Chee said they managed to buy the house, which required a lot of work, before it went to auction.

She didn't buy a house earlier because they had been living in the UK. "Having lived in London, we are still shocked at the Auckland prices."

Ms Chee said because both she and her husband had jobs, getting a bank loan was "pretty straightforward".