High frustration at bank delays
Each month we invite mortgage advisors around the country to give insights into developments in the residential real estate market from their unique perspective. Our latest survey has attracted 58 responses.
The main themes to come through from the statistical and anecdotal responses include these.
Brokers are more and more frustrated by slow bank processing times for applications whereas customers going directly into bank branches are getting served quickly.
High expectations of additional falls in interest rates are keeping borrowers strongly focussed on fixing for only short periods of time.
Investor activity has picked up but there are no indications of any unusual strength.
More or fewer first home buyers looking for mortgage advice?
The net proportion of mortgage advisors in our survey who report that they are seeing more first home buyers has edged down slightly to 26% from 55% in November. This is the weakest result since July when a net 7% were seeing fewer young people but is not that far out of line with the strong results seen since the upturn in August.
Brokers report that at the same time as some borrowing requirements are being eased others are being tightened and there is not high consistency between lenders. Slow processing times are causing problems for many buyers.
Comments on bank lending to first home buyers submitted by advisors include the following.
Bank turnaround times are holding up first home buyers.
FHBs are active, some more stock has helped and this group in particular is assisted by the lower servicing rates.
No noticeable change to criteria, although test rates dropped quickly with reduced interest rates. Competition appears more intense with some Banks offering cash-backs.
Little change apart from the lending test rates reducing. DTI’s having no impact yet, will most likely have an impact next year for certain borrowers i.e. single or couple with no dependants.
More or fewer investors looking for mortgage advice?
This month’s survey has shown a decrease in the net proportion of advisors seeing more investor clients to 36% from a record 60% last month. Investors are active in the market though do not dominate it and as yet the new Debt to Income rules are not having much impact.
Comments made by advisors regarding bank lending to investors include the following.
Some banks include rates and insurance as an expense, others don’t.
No noticeable change to criteria, although test rates dropped quickly with reduced interest rates.
Investors are definitely back in average numbers (over last couple of months) bank appetite is largely unchanged.
A bit more common sense being applied to shading. DTIs will become an issue in main centres.
More or less lenders willing to advance funds?
Bank willingness to advance funds was perceived as improving by mortgage brokers early in 2023 and that situation has continued. We are now three years down the track from the credit crunch of late-2021 when rules were radically tightened through the Credit Contracts and Consumer Finance Act and much tougher LVR regulations.
This month a net 33% of brokers have reported that banks are more willing to lend, up from 17% last month but below the high of a net 57% in September when the effects of easier monetary policy began truly running through the population.
What time period are most people looking at fixing their interest rate?
With high expectations that additional cuts to the official cash rate will be made through 2025 to follow the 1.25% worth to date, borrowers overwhelmingly favour fixing for only short time periods. Six months is the most preferred term.
Short fixing has dominated since the start of the year.
Fixing longer than two years is favoured by almost no-one.
Are more property owners asking about refinancing?
A net 17% of advisors have this month reported that more people are looking for refinancing of their existing mortgages. As with our other measures this is down from a month ago with November’s result being a high net 49%.
Interest in refinancing is likely to remain strong as long as expectations remain for additional declines in interest rates through 2025.
