Mortgagor Vulnerability and Deposit Affordability in New Zealand before and after the Loan-to-Value Restrictions

Mortgagors constitute a third of households in New Zealand, and the vulnerability of mortgagors to different risks impacts the financial system as a whole. This study uses Household Economic Survey (HES) microdata provided by Statistics New Zealand to assess changes in the vulnerability of new non-investor mortgagors from 2006 to 2016. The data also enables me to estimate ‘deposit affordability’ – the affordability of the equity required from households to purchase houses. My measure of affordability computes the number of years required to save a deposit given the Loan-to-Value rules that apply in the country as a whole or in a given locality.