Are lenders loosening up?
In a promising development for New Zealand’s property market, a net 57% of mortgage advisers surveyed this month believe that lenders are becoming more willing to advance funds.
This is the highest figure recorded in the four-year history of the survey by economist Tony Alexander (pictured above), signalling a potential shift in credit availability after a period of significant tightening.
The stringent credit conditions that took hold in 2021 played a major role in the downturn in real estate activity and prices. As lenders pulled back, property transactions slowed, causing the market to cool.
However, this latest result suggests that the tide may be turning as the economy adjusts to a new rate cutting cycle, offering renewed hope for homebuyers and investors alike.
The monthly survey, which offers insights from mortgage advisers across the country, gathered responses from 51 participants this week. Their perspectives provide valuable on-the-ground intelligence into the evolving dynamics of New Zealand’s residential real estate market.
Additionally, a net 53% of advisers reported a rise in refinancing inquiries, marking the second-highest result on record.
This feedback aligns with recent CoreLogic data, which suggests sales volumes and property listings are on the rise.
“This likely reflects the changing interest rates landscape making people think about more active management of their interest rate reset exposure.”
Are more first homebuyers looking for advice?
A high net 51% of mortgage advisers this month reported that they are receiving more enquiries from first home purchasers.
Alexander said this was a strong turnaround from two months ago when a net 7% said that fewer enquiries from these generally young people were coming through.
“Banks are slowly easing up on their criteria for lending to borrowers generally including first home buyers, and general sentiment in the country is improving now that a path towards less interest rates pain has become clear,” he said.
According to some adviser comments, it’s becoming easier to obtain lending for high-LVR clients, with some banks allowing for easier servicing criteria for those without a 20% deposit.
One adviser said uncommitted monthly income (UMI) requirements for high LVR have also continued to ease.
“Test rates have gone down for most of the major banks making it easier to get more money, UMI requirements for 10% deposit have been eased a little bit, meaning more borrowing for first home buyers,” said one mortgage adviser.
“Boarder incomes allowed at less than 20% deposit – has been for a while but test rates reduction, makes it easy to borrow.”
Another adviser noted the changes in the CCCFA are slowly filtering through.
“Watch this space. Banks are also starting to reduce their test rates which is encouraging.”
Are more investors looking for advice?
While not as high as first-home buyers, a net 35% of advisers had also reported that they are seeing more enquiry from investors.
This is well up from 9% two months ago but that two-month change is less than for first home buyers just discussed.
Alexander said last month’s result was a net 38% of brokers seeing more investors.
“Therefore, while we can safely say that more investors are being attracted back into residential property, it is still the case as it has been since perhaps mid-2021 that it is first home buyers who are the prime movers in the marketplace,” he said.
Advisers noted these lower test rates are increasing affordability and the inclusion of rates and insurance in assessment is no longer required.
“LVR changes (70% for investors) has made it easier to use the equity to purchase the next property coupled with the test rates reductions,” one adviser said.
“Rental income shading linked to tax deductibility is almost gone.”
