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Buying a home is a significant life milestone—one that comes with many questions and concerns, especially in the current market conditions. At BNZ, we often hear these concerns from our customers. Here’s a snapshot of the current market, some helpful tips for first home buyers, and how BNZ can support you on your property journey.
What we’re seeing in the property market
The cost to get into your own home has reduced in most regions of the country over the last two years, as house prices have fallen from the 2021 market peak.
However, the Reserve Bank of New Zealand is continuing its drive to bring down inflation, increasing the Official Cash Rate (OCR) from 0.25% in August 2021 to 5.5% today—the highest it has been since late 2008. This has direct implications for mortgage rates.
With the challenging economic conditions set to continue for the foreseeable future, selecting an appropriate interest rate term that best suits your individual circumstances and goals is critical.
Tailoring interest rates to your needs
Some customers favour shorter-term rates, optimistic about a more positive economic picture from 2024 onwards. Others prefer longer-term fixed rates for the certainty it provides. Whichever camp you fall into, remember that with current uncertainties, it’s crucial to factor appropriate buffers into your planning. At BNZ, we’ve seen customers benefit from splitting their home loans into multiple rate terms, offering both flexibility and certainty. If you’re unsure of the best options for you, our expert bankers can help guide you through the decision-making process.
Tips for First Home Buyers
Contrary to popular belief, your Christmas shopping spree at Kmart or your discretionary spending doesn’t automatically doom your home loan application. Thanks to recent amendments to the Credit Contracts and Consumer Finance Regulations 2004, banks are now expressly permitted to exclude discretionary spending from affordability testing. So, while it’s wise to manage your finances carefully, know that we understand the nuances of personal spending habits, and we are able to consider how your spending habits will change once you get a home loan.
One useful exercise is to “live like you own the house” for three months. Assess how your spending patterns shift and whether you can comfortably manage a mortgage. This gives you more confidence when it’s time to make that big step.
The property landscape for first home buyers
An increase in properties being sold through negotiation and sellers no longer averse to listing their property with an asking price has provided more opportunities for first home buyers to negotiate and secure a home.
So, when is the right time to buy? That’s subjective and dependent on your personal circumstances. Whether you’re looking for family stability or are cautious due to current economic conditions, the reasons for buying are uniquely yours.
However, with house prices currently softer than they have been in years, giving more first home buyers the chance to get into the market, now could be a good time to get your finances in order. This will help put you in the best possible position to secure a home loan in the future, should you decide this is important to you.
How can BNZ help?
Our mission is to help as many customers as possible find their new home. With over 60 Home Loan Partners across New Zealand, specialised in home loans and backed by knowledgeable local branch bankers, we’re here to assist you at every step of your first home journey.
Talk to us! BNZ offers multiple avenues of support for first home buyers. We’re here to help, so contact us today to find out how we can tailor a home loan that works best for you.
BNZ DISCLAIMER: All BNZ home loans are subject to our lending criteria (including minimum equity requirements), terms and fees. An establishment fee of up to $150 may apply. This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else
Lisa McShane is the Head of Home Loan Partners and Specialists at Bank of New Zealand (BNZ). With over 29 years in the banking sector, Lisa has honed her skills in customer engagement, team leadership, and financial advising.
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