& Tony Alexander Mortgage Advisers Survey – June 2023

Strengthening signs grow

Each month we invite mortgage advisers around the country to give insights into developments in the residential real estate market from their unique perspective. Our latest survey, undertaken last week, attracted 53 responses.

The main themes to come through from the statistical and anecdotal responses include these.

  • First home buyers are solidly in the market, assisted by some easing in credit rules.
  • Investors are still rare but starting to express some mild interest.
  • The one year, 18-month, and two year terms are most favoured for fixing one’s mortgage interest rate.
More or fewer first home buyers looking for mortgage advice

For the fifth month in a row a strongly positive net proportion of mortgage advisers have reported that they are seeing more first home buyers in the market looking for advice. Last month the reading was a net 49%, this month it is 51%.

There is increasing discussion about house prices bottoming out and many buyers have been waiting up to two years for market conditions to be more favourable to buyers. Initially they may in 2021 have held off buying because of a lack of choice, lack of ability to attach conditions to offers, and high cost of repeatedly undertaking work required to make a bid then failing to secure a property.

Comments on bank lending to first home buyers submitted by advisers include the following.

  • A little more low deposit lending opened up 1st June. CCCFA relaxed at same time making things a little easier.
  • More relaxed with expenses, provided bank statements are in order.
  • V slight softening in acceptance of over 80% lending. Kainga Ora loans still the main way to purchase with a small deposit, needing a live deal elsewhere. Further softening in the cccfa is positive.
  • Loosened LVR requirements with RBNZ changes. Reduced UMI surpluses required for debt servicing.
More or fewer investors looking for mortgage advice?
For the second month in a row our survey has shown more brokers as seeing extra investors in the market seeking advice rather than fewer. The latest result of a net 13% positive is the strongest since January 2021 and up from 3% in May and -13% in April.

Comments submitted by mortgage brokers indicate that the overall level of interest from investors is still very low. But the discussion of the market bottoming out and interest rates peaking appears to be eliciting some selected interest.

Comments made by advisers regarding bank lending to investors include the following.

  • Haven’t noticed much difference yet with LVR increasing from 60-65%.
  • Deposit requirements have reduced to 35% but again test rates have gone up, with interest rates so high, investors are not keen to take on debt at the moment. Interest deductibility is what everyone is waiting for – waiting for election results to see if there is a change of government.
  • Less of a deposit required now.
More or less lenders willing to advance funds?
A net 42% of mortgage advisers this month have reported that they are noticing banks as being more willing to lend funds for a home purchase. This is slightly down from a net 48% last month but makes for five months in a row of strongly positive results for this measure.

In an environment of low sales and with the Reserve Bank perhaps still sensitive to any signs that mortgage rates are being discounted, banks are relying on easier lending rules in order to at least protect market share.

The easing of lending toughness has been assisted by the June 1 change in Loan to Value Ratio rules allowing banks to undertake extra lending at less than 20% deposit, and cutting the minimum investor deposit from 40% to 35% of property valuation.

What time period are most people looking at fixing their interest rate?
The one and two year terms continue to be most favoured by borrowers. There is no interest in floating of fixing longer than three years. Not captured in our survey is the strong preference which many people have for the 18-month term.
The one year term preference has been very strong since February.
The two year preference slipped has settled at levels near 45% of borrowers as compared with 75% for a few months late last year when worries about interest rates ising were very high.
Preference for fixing three years has increased this month, perhaps assisted by some recent cuts to that term in contrast with recent increases for one and two years.
No-one wants to touch five year rates with a bargepole.

Download the full report:

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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