Buyer’s market remains in force
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 49 responses.
The main themes to come through from the statistical and anecdotal responses include the following.
There are few major issues with finance availability at the moment although one large lender has just pulled back on some low deposit lending.
There has been a general easing in activity in recent weeks seemingly in reaction to some rises in interest rates but also buyer awareness of plentiful listings. They feel time is on their side.
Investors continue to have a generally low presence.
Borrowers have their strongest interest in fixing for three years since early-2022.
Compared with a month ago, are you seeing more or fewer first home buyers looking for mortgage advice?
There has been a strong fall this month in the net percent of mortgage advisors seeing more first home buyers in the market to 8% from 33% a month ago. This is the lowest reading since August last year and well down from the strong 55% recorded in our early-November survey.
First home buyers show high awareness that the market is in their favour and continue to take their time making a deal.
Brokers did not volunteer much information regarding exactly why there has been an easing off of the growth in demand but one or two cited events in the Middle East and uncertainty created by recent fluctuations in borrowing costs.
Comments on bank lending to first home buyers submitted by advisors include the following.
Doesn’t seem to be much change in the lending criteria. A new lender with the Kainga Ora scheme is a good thing.
One of the larger banks appear to be making small adjustments to credit policy to make things easier for some clients. Small changes to things like return from maternity leave etc.
No real changes other some small tweaks. Nice to see some pre-approvals but it would be good for this to be more widespread to give buyers more choice.
Compared with a month ago, are you seeing more or fewer investors looking for mortgage advice?
Last month we noted that for the first time since August 2023 more mortgage brokers felt that there were fewer investors in the market than more. Now that net proportion has deteriorated further to a net 18% seeing fewer investors from a net 6% last month.
Advisors have noted an increase in the number of investors looking to sell their properties at the same time as fresh demand is constrained.
Comments made by advisors regarding bank lending to investors include the following.
A major lender just now withdrew from lending over 70% LVR due to volumes risking them exceeding their limit.
Drilling into expenses, and taking a close look at the value of any existing investment properties. Strong exit plans for “older” investors.
Some banks have been actively providing above 70% LVR for investors however that has pulled back with reserve bank limits being reached.
The investor market hasn’t changed much, and conditions still feel relatively flat. We’re continuing to see a trend where more investors are selling properties, consolidating their portfolios, and reducing debt rather than expanding.
Compared with a month ago, are you finding lenders more or less willing to advance funds?
A net 2% of advisors have this month reported that banks are more willing to advance funds. Credit availability does not appear to have been much of a problem for buyers since early-2023 although there continue to be frequent changes in the criteria applied by different lenders.
It looks like there has been a pullback in the strong competition for business using generous cashback offers. Low deposit lending availability seems to vary considerably from one bank to another.
What time period are most people looking at fixing their interest rate?
Most borrowers are showing a preference for fixing their mortgage interest rate for either two years or three years. The five year term attracts essentially zero business but the one year period continues to attract some interest.
Demand for one year fixed rates has been on the low side for three months now.
The prefence for two year fixing jumped strongly last month but has eased off slightly in this month’s survey.
The greatest point of interest in this month’s survey is the jump in the proportion of brokers noting that borrowers prefer to fix their mortgage rate for three years. This percentage has risen to 32% from just 4% a month ago and this is the highest reading since early in 2022.
Widespread discussion of rising interest rates in response to higher than expected inflation and now perhaps rising oil prices likely lies behind the increased desire of borrowers for greater interest rate certainty.
Are more property owners asking about refinancing?
With the unusually strong competition between banks for business using cashback offers now easing off we have seen further weakness in the net proportion of brokers saying they are seeing more refinancing enquiries. This month’s result is -20% from -22% last month.
