Investors appear to be left reluctant after review of numbers
Independent economist Tony Alexander (pictured), alongside mortgages.co.nz, has released his October mortgage advisers survey. This survey was able to attract 75 respondents.
A net 59% of the respondents said they are receiving more enquiries from first-home buyers, which indicates young buyers “driving the upturn” in the housing market, according to the report.
“Only our first survey in June 2020 showed a higher net proportion of mortgage brokers saying that more first-home buyers were seeking financing advice,” said Alexander.
On bank lending to first-home buyers, pre-approvals could not be secured for high LVR > 80% without a live deal. Alexander has described it as “disappointing” because “you can’t send them out ‘house shopping’ with confidence.”
Also, interest rates and margins are impacting serviceability, according to the survey. Alexander gave examples of banks extending some help, with one bank dropping their monthly surplus requirements for over 80% lending and another incentivising higher cash contribution for FHB. At the same time, banks have their own interpretations of compliance within CCCFA in their efforts to help clients.
Investors showing reluctance?
According to the report, a net 24% of mortgage brokers have reported receiving enquiries from investors. The rate is unchanged compared to the previous month, and the situation appears to be significantly different from almost all other months since early 2021, when tax rules for investors changed.
The advisers said enquiries come at a steady pace; however, once investors get the numbers and speak with their accountant, they no longer wish to proceed with the application process “as they cannot make the numbers work or they are not willing to top-up the difference,” Alexander said.
Earlier this year there was a change in perceptions of bank willingness to lend to home buyers, and since then, things have not changed much with a net 32% of brokers saying lenders are getting more willing to advance funds, the survey found.
In terms of what time period investors are looking at fixing their interest rate, 38% of advisers said 18 months is the preferred fixing term, 10% have chosen one year, and 45% said two years.
When it comes to property owners asking about refinancing, a net 37% of brokers said more people are enquiring about refinancing. “This continues a string of relatively high readings for this measure in place since March and likely reflects the extra hikes in mortgage rates in an environment where many people have been rolling off record low short-term fixed rates previously secured during the dying days of the pandemic,” said Alexander.
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