Young buyers and investors still seeking advice
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 52 responses.
The main themes to come through from the statistical and anecdotal responses include the following.
There continues to be a slow trend of easing bank lending criteria.
Mortgage application processing times are perceived as still very poor by mortgage brokers.
Buyer demand for property is still weaker than usual though first home buyers are active, owner occupiers and investors far less so.
Compared with a month ago, are you seeing more or fewer first home buyers looking for mortgage advice?
A net 17% of mortgage advisors this month have said that they are seeing more first home buyers looking for some advice. This is essentially unchanged from June’s result of a net 15% and the average for the five years our survey has been running of a net 16%.
The key point to note beyond the fact that this reading is still positive is that it is well down from advisor perceptions of first home buyer presence between August last year and March 2025.
Comments on bank lending to first home buyers submitted by advisors include the following.
Over 80% LVR lending still tricky unless its a “Live Deal” and this is putting off some potential purchasers who want certainty on getting the finance before getting too emotionally attached to a property, or the expectation they can purchase a home
Banks appear to be keen to support FHB at the moment and whilst pre approvals are not obtainable, most banks are supporting the live applications with some expediency.
Most banks are live deals only for any non bank clients, regardless of LVR. Makes providing a range of options tricky
Compared with a month ago, are you seeing more or fewer investors looking for mortgage advice?
A net 21% of mortgage brokers have reported that they are seeing more investors looking for financial advice. This tells us that although the housing market is dominated largely by young buyers at the moment and has been since early-2023, there are people looking to purchase for investment purposes.
But as is the case noted for those young buyers just above, investor interest is weaker than it was over the period from August last year to March this year.
Comments made by advisors regarding bank lending to investors include the following.
With test rates having dropped over the past several months, DTI’s are now more commonly popping up as a limiting factor
Some lenders have now done away with having to include Body Corp costs as a separate expense for investment properties in the debt servicing calculation.
UMI is coming down with certain banks. Assessors seem to be asking a lot more questions and more supporting documentation than before.
Compared with a month ago, are you finding lenders more or less willing to advance funds?
In this month’s survey a net 13% of brokers have reported that banks are becoming more willing to advance funds. This is the third net 13% reading in a row and this measure has been in positive territory since February 2023 when the young buyer driven recovery in the housing market started.
In their comments brokers mainly noted slight easings still being underway in many lending criteria but with the occasional tightening here and there.
What time period are most people looking at fixing their interest rate?
Kiwis very rarely fix their mortgage interest rate for longer than three years, even when the five year rate was only 2.99% for an eleven month period over 2020-21. The first graph here shows 33% of brokers indicating borrowers are preferring to fix one year or less, 21% for 18 months, 33% for two years, and 10% for three years.
In that regard the spread of rate preferences appears as a relatively normal situation and not something perhaps driven by people having a strong expectation for where interest rates might be headed.
This graph shows the changes in the proportion of agents saying people prefer fixing one year. The trend has been down since the start of the year.
This next graph shows how interest in fixing two years has just eased off after soaring in popularity over the March to May period.
There is a small rise underway in the proportion of people fixing their mortgage interest rate for three years.
Are more property owners asking about refinancing?
A net 17% of brokers have reported seeing more property owners enquiring about refinancing. This is the lowest such reading since late-2013 and may indicate either no great confusion about what is happening with interest rates, or no large feeling that banks are competing aggressively for business.
