By David Hargreaves

The seemingly unstoppable growth of housing investment is taking at least a pause for the moment, ahead of the October 1 official introduction of new LVR restrictions targeting investors.

The key thing to note is that banks have been effectively applying the new rules virtually from when they were first announced on July 19 - so any dampening impact could be expected to show up in the figures from late July onwards. And it is.

The RBNZ's lending by borrower type figures for August show that the overall share of new mortgage lending going to investors in the month dropped sharply to just under 33%, from 37% in July and nearly 38% in June. Previously the ratio had been rising strongly.

Separately, the lending by LVR figures for August, also just released, show that in Auckland the percentage of new mortgage lending that's going to investors dropped to 41.3%, from nearly 46 in July and almost 48% in June. The investors in Auckland had previously been a seemingly ever-rising tide too.

And in a further sign of the potential impact of the LVR move, August figures on lending by payment type show that the percentage of those taking up new mortgages on interest-only terms has dropped to 38.2% from 40.3% in July. Within this, the proportion of investors going on interest-only terms has declined to 52.3% in August from 53.7% in July and 55.5% in June.

It's possible first home buyers are seeing this pulling back of investor activity as an opportunity.

While the overall total of new mortgage money advanced in August fell, the amount secured by first home buyers surged some 10.3% to $760 million.

In the month the first home buyers accounted for 12.4% of the new mortgage money advanced, which was up from just 10.9% in July and represented the highest proportion of the monthly total made up by first home buyers in at least a year.

Reserve Bank Governor Graeme Wheeler said last week he was seeing initial signs that its new Loan to Value Ratio (LVR) controls on landlords announced in mid-July, along with tighter lending criteria and a lack of pass-through of previous OCR cuts by banks, was moderating the housing market.

The August figures show there was $6.114 billion of new lending in total during the month, down from $6.312 billion in July, $6.803 billion in June and a stratospheric $7.287 billion in May. The August figure is however still slightly up on the total at the same time a year ago, when it was $5.940 billion.

The question in coming months will be whether the latest figures show the start of a slowing trend in the housing market - or whether they demonstrate close to the full impact that the new LVR measures will have.

Regardless of how effective the new LVR rules are, the RBNZ is widely expected to follow up with new debt-to-income rules early in the new year - assuming it gets agreement from the government to introduce these and add them to its macro-prudential toolkit.