Source: MIL-OSI Submissions
On Monday 12 August 2019 at 3pm, the Reserve Bank will publish debt-to-income (DTI) statistics for new mortgages in New Zealand. DTI data shows how total borrower debt for new mortgage customers compares with borrower income.
About DTI data
When taking out a mortgage, customers are asked a range of questions by their bank, including questions about their income and other debt.
In the monthly Reserve Bank ‘DTI survey’, banks provide us with summary data on the debt and income of their new mortgage customers. Borrower debt to income can be expressed as a simple DTI ratio.
DTI data will be published in a range of DTI ratios – from ‘DTI under three’ to ‘DTI over six’. Data will be available for first home buyers and other owner occupiers, and for Auckland borrowers compared with the overall picture for New Zealand.
We will publish DTI data in two new web tables, under lending and monetary statistics:
- Residential mortgage lending by debt-to-income (DTI) purpose (Table C40)
- Residential mortgage borrower gross income (Table C41)
Monthly data will be available, from June 2017 to June 2019. Going forward, these statistics will be published quarterly on the Reserve Bank’s website and can be used to identify trends in mortgage lending.
DTI data to inform financial stability
The Reserve Bank developed the DTI survey to better understand risks to financial stability from mortgage lending activity. Borrowers with higher debt levels relative to their income would have a smaller buffer to withstand shocks to their serviceability, for example a partial loss of income or higher interest rates.
DTI will form part of a larger dataset that provides insights into New Zealand’s housing market. It joins the loan-to-value ratio (LVR) survey, which measures new mortgage commitments by the value of mortgage loans relative to the value of the property. DTI data indicates credit risk, while LVR data indicates credit loss in the event the borrower cannot service their debt.