New statistics show mortgage lending by payment type
The Reserve Bank has introduced a new data table (C32) which presents statistics on new and existing residential mortgage lending by payment type – interest-only, and principal-and-interest loans.
Interest-only loans are defined as having no scheduled repayments. This includes revolving credit loans which have a fixed limit. Principal-and-interest loans are defined as having scheduled repayments and include revolving credit loans which have a scheduled reducing limit.
The statistics show that in May 2016, almost 60 percent of all new mortgage lending was on principal-and-interest payment terms, while 40 percent was on interest-only payment terms. These proportions have been fairly stable since the data was first available in July 2015.
Interest-only loans tend to convert to principal-and-interest loans after a period of time, and Reserve Bank statistics show that only 28 percent of banks’ existing stock of mortgages are on interest-only payment terms.
Interest-only loans are less likely to have a loan-to-valuation ratio (LVR) above 80 percent, compared to principal-and-interest loans.
The new data has been collected from registered banks as part of regular surveys run by the Reserve Bank, and has recently undergone the necessary quality controls needed for it to be published alongside other Bank statistics.
The new mortgage lending statistics will be published monthly, while the data on all existing mortgages is available on a quarterly basis.
A statistical advisory (PDF 326KB) explaining the new residential mortgage lending statistics in more detail is available.
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