& Tony Alexander Mortgage Advisers Survey – November 2023

Investors slowly returning.

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 75 responses.

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

  • First home buyers remain actively engaged with the housing market.
  • Demand from investors is rising.
  • Confirmation of a change in government alongside discussion of rising prices is bringing more people into the market.
More or fewer first home buyers looking for mortgage advice

This month 75 mortgage brokers from around New Zealand have responded to our survey and the first result of note is that a net 35% report they are seeing increased numbers of first home buyers looking for advice. This is a decline from a net 59% in October but consistent with the strong results in place since February this year.

First home buyers have been the key drivers of the turning in New Zealand’s residential real estate market this year and our survey shows they remain well engaged with the market – despite extra rises in interest rates recently.

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

  • Same criteria as always. Not so hard on discretionary spending.
  • Over 80% is still limited if not eligible for the first home buyer’s mortgage. It is hard for buyers not being able to obtain a pre-approval. There has been a small softening in UMI’s required for over 80% but very little else.
  • xxx new policy for those with less than 20 % deposit ,will accept 1 boarder up to $ 200 PW.
  • Servicing requirements continue to be tight in relation to high LVR lending across all the main banks. When clients aren’t eligible under Kainga Ora first home loan scheme there remain limited options to proceed with other than mainly a ‘live’ deal which is then subject to low equity margins etc.
More or fewer investors looking for mortgage advice?

For the third month in a row the net proportion of brokers reporting that they are seeing more investors seeking advice has increased. The outcome this month is a net 31% from 24% last month. Three months ago a net 13% were still saying there were fewer investors in the market.

As the graph clearly shows, there has been a firm turnaround in investor interest in recent months.

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

  • Reduced hair cuts on rentals at one large bank.
  • Rental calculations vary across banks, with some banks trimming the rental income very hard. Some count rates and insurance as an expense, some don’t.
  • A few are easing up but its still pretty tough.
  • Waiting on confirmation of changes to interest deductibility laws.
  • Loan servicing assessed at 9.15% is a tough hurdle to jump.
More or less lenders willing to advance funds?

A net 29% of mortgage advisers have reported that banks are becoming more willing to advance funds. This outcome is consistent with others since February and the comments supplied by respondents show that lenders are slightly and slowly improving lending rules as each month goes by. But they remain hesitant to make any large changes.

What time period are most people looking at fixing their interest rate?
The term most favoured by borrowers for fixing their mortgage interest rate is 18 months with 45% of brokers noting this preference. 24% say that the one year term is most favoured by their client base and 28% say the two year term is most favoured. As good as none say borrowers want to fix longer than two years.
The preference for fixing one year has recovered slightly this month after easing in October – with that October result potentially distorted by the inclusion for the first time in our survey of the 18-month option.
In contrast to the rise in one year preference this month the preference for fixing two years has backed off slightly.

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.

For the record, here is the graph of brokers saying the three year term is most preferred.

There is no point publishing graphs for the four and five year terms as few months’ results are above 0%.
Are more property owners asking about refinancing?
In recent months there has been no particular strengthening or weakening of the proportion of brokers reporting that more people are seeking insight into refinancing their current mortgage.

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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