1. Mortgage activity continues to rise First things first, happy New Year! For obvious reasons, the past couple of weeks have been light for data releases, so I thought I’d take this opportunity to dig a bit deeper into the Reserve Bank’s November mortgage lending figures (which were out on December 23). Overall, lending activity remains on an upward trend, with $8.8 billion of new mortgages in November, covering house purchases, loan top-ups, and bank switches (refinance). That was 19% higher (or around $1.4b more) than the same month in 2024, and the 26th rise in the past 28 months. The stock of mortgage debt is growing too, now up to $389b, and 5.8% above the same time in 2024. That’s the fastest rate of increase since July 2022. 2. No clear jump in low-deposit lending just yet Given that the easing in the LVR rules was announced way back in mid-October, there was always a chance that banks would move a little earlier than the official change to the system on December 1 – but in the event, that didn’t really happen. In November, 14% of lending to owner occupiers was done at low deposit (<20%); still well below the existing 20% speed limit, let alone the new 25% cap. For investors, less than 1% of lending was done at low deposit (<20%), well inside the prevailing 5% cap and also the new 10% limit. It’ll be interesting to see December’s figures in late January. Cotality chief economist Kelvin Davidson: "Investors may have already reached their limit." Photo / Peter Meecham 3. Debt-to-income rules may be close to binding for investors Meanwhile, an alternative split of the data showed that the share of lending going to first home buyers at a high debt-to-income ratio (DTI>6) remains below 10%, versus the speed limit of 20%. Not too much to be concerned about there. For investors, however, we may now be very close to the point where DTIs become a much more significant consideration. In November, about 15% of lending to this group was at a high DTI (>7), which was the highest since August 2022. Most importantly, though, if the banks aim to keep a 5% buffer between actual lending and the upper threshold of 20% (to avoid any risk of Reserve Bank enforcement measures), investors may have already reached their limit. This will be a key factor to watch for the housing market in 2026, especially as the election nears and capital gains tax and possibly interest deductibility become an issue. 4. Still waiting to see the effects of 1.5% cashbacks November’s lending data also showed that bank switching remains higher than normal, albeit there wasn’t really a spike that month. Remember that November was when the intense competition amongst the banks with 1.5% cashback offers really kicked into gear, and I’ve heard from many mortgage advisers that this generated a lot of extra activity. Given the normal steps in the process, however, perhaps November was always too early to expect this to show up in the hard data. It’s certainly going to be intriguing to see December’s figures. 5. Borrowers have some tricky decisions to make And finally, the latest Reserve Bank data showed that 15% of existing loans are on floating rates, with another 61% fixed but due to roll over within the next 12 months (and 32% within six months). With mortgage rates now looking likely to have stopped falling, and some longer-term fixes even rising again before Christmas, there will clearly be a lot of thought required from many households about their next decisions. - Kelvin Davidson is chief economist at property insights firm Cotality