Property investors slowly returning – survey

First-home buyers maintain active engagement

Property investors slowly returning – survey

A joint survey by and independent economist Tony Alexander (pictured above) has revealed rising demand from investors along with sustained active engagement from first-home buyers.

First-home buyers still active

The recent survey of 75 mortgage advisers nationwide found that first-home buyers continued to drive the residential real estate market in New Zealand. 

Despite recent interest rate increases, a net 35% of mortgage brokers report seeing an uptick in first-home buyers seeking advice, a slight decline from a net 59% in October but consistent with robust results observed since February.

Comments from advisers indicated that while criteria for bank lending remained largely unchanged, some banks are showing flexibility on discretionary spending. However, challenges persist for those not eligible for the first-home buyers’ mortgage, with limited options available.

Rising demand from investors

Demand from investors continued to increase for the third consecutive month, with a net 31% of brokers witnessing more investors seeking advice, up from 24% the previous month. This turnaround contrasts with conditions three months ago when a net 13% reported fewer investors in the market.

Comments from advisers noted variations in rental calculations across banks and the impact of pending changes to interest deductibility laws. While some easing is observed, loan servicing requirements at 9.15% remain a challenging hurdle for investors.

Lenders on advancing funds

The survey showed that a net 29% of mortgage advisers reported that banks are becoming more willing to advance funds. This result aligns with observations since February, suggesting a gradual improvement in lending rules. However, lenders remain cautious and hesitant to implement significant changes.

Interest rate preferences

The preferred term by borrowers for fixing mortgage interest rates is 18 months, according to 45% of surveyed brokers, followed by a one-year term (24%) and a two-year term (28%).

While the preference for a one-year term has risen this month, the desire to fix rates for two years has slightly decreased.

“We might be able to interpret these shifts as meaning people are becoming slightly more confident of rate falls a year or so from now,” Alexander said.

Refinancing trends

Meanwhile, there has been no discernible strengthening or weakening in the proportion of brokers reporting increased interest in refinancing current mortgages in recent months, Alexander said.

Read the & Tony Alexander Mortgage Advisers Survey for November 2023 to see graphs and comments from surveyed mortgage advisors.

For the prior month’s survey results, read "Advisers survey: Enquiries steady but push-back evident in first home buyers". Also check out "Tony Alexander on NZ market upturn".

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