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New debt-to-income data informs New Zealand’s mortgage risk

The Reserve Bank has today released new debt-to-income (DTI) data for new mortgage applications in New Zealand, showing how total borrower debt compares with borrower income.

The Reserve Bank developed DTI data to better understand risks to financial stability from mortgage lending activity. Monthly data is available from June 2017, and is sourced from a survey completed by all registered banks in New Zealand.

“Banks supply us with summary data on the debt and income of their new mortgage customers,” Head of Data and Statistics Steffi Schuster said.

“The DTI statistics we’re publishing today give an insight into the ability of homeowners to service their mortgages.”

DTI data is important to inform financial stability risks, as households with higher debt levels relative to their income may be more at risk of defaulting on mortgage repayments.

Borrowers with higher debt levels relative to their income are more likely to reduce spending in response to shocks, such as a loss of income or higher interest rates. This could create stress for individual households, and have an impact on the wider economy.

In addition to informing financial stability risks, DTI data is also a useful tool for assessing housing affordability for recent homebuyers.

“DTI data can be viewed alongside other information to give richer insights into New Zealand’s housing market,” Ms Schuster said.

“For example, by comparing DTI figures with loan to valuation data, we can better understand risks from households with a combination of large loans relative to the value of their property, and large loans relative to their income.”

Going forward, these statistics will be published quarterly on the Reserve Bank’s website and can be used to identify trends in mortgage lending.

For example, the June 2019 DTI statistics show that for owner-occupiers taking out new mortgages:
* 31 percent of borrower debt was at a DTI over five, down from 37 percent in June 2017.
* 33 percent of first home buyer debt was at a DTI over five.
* In Auckland, almost half of first home buyer debt was at a DTI over five.
* First home buyers most commonly borrow between 4-5 times the size of their income.
* In June 2019, the average gross income of first home buyers was $116,000 per year, compared with $132,000 for other owner-occupiers.

More information:
* Residential mortgage lending by DTI (
* Residential mortgage borrower gross income (
* Debt to income data: a quick introduction (PDF 238KB) (
* Technical Note: debt-to-income (DTI) ratio new commitments survey (PDF 585KB) (

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