The amount first home buyers are paying for a home reached its highest level in two years last month but the amount of debt they are taking on to fund their purchases is also rising steadily.
Interest.co.nz estimates that the average price paid by first home buyers in June was $682,000, up by $9000 (1.3%) compared to May and up by $21,000 (3.2%) compared to June last year.
That was the highest estimated average price paid by first home buyers in any month of the year since June 2023, but was still 5% lower than the record of $718,000 estimated average first home buyer price set in April 2022.
However the amount of debt they are taking on to fund those purchases is also rising and much of it is in the form of higher risk, low equity mortgages.
Based on the latest Reserve Bank figures, the average size of the mortgages approved to first home buyers in June was $575,265, up by $23,101 (+4.2%) compared to June last year.
That was the highest average mortgage size for first home buyers since September 2022.
Of the 2644 mortgages approved to first home buyers in June, 1106 (41.8%) were low equity loans, where the borrower has less than a 20% deposit.
That level of low equity lending to first home buyers was barely changed from the record 41.9% of low equity loans made in May, suggesting low equity lending to first home buyers is persisting at or near record levels.
The average size of the low equity loans approved to first home buyers in June was $642,857, while the average mortgage amount approved to buyers with at least a 20% deposit was $526,658.
