"Banks are competing for customers too," economist says
Banks are offering a range of deals to attract customers, as falling house prices, tough lending conditions, and rising interest rates have all led to a drop in mortgage applications.
Read more: BNZ announces cashback offer
BNZ and Kiwibank are both offering 1% cashback for new home loan customers (with conditions), that could save them up to $20,000, while ANZ recently launched a special 1% interest rate for borrowers who want to make their homes energy efficient.
Read next: ANZ launches Good Energy Home Loan
Ben Kelleher, managing director at ANZ, said customers have been asking for incentives.
“The market has slowed down, you’re seeing it in house sales as well, the fear of missing out has gone and the fear of overpaying has come in - it’ll be interesting to see what happens in the summer months,” Kelleher told 1News.
Hannah Ouellet, an economist from Sense Partners, said it has become a buyer’s market when it comes to competition at the banks – especially with the market cooling considerably.
“Banks are competing for customers too,” Ouellet told the publication.
She believes, however, that many of the deals on offer are geared toward those on higher incomes, with higher deposits.
“Reading between the lines of the terms and conditions, it’s clearer that the larger the loan, the larger the cashback,” Ouellet told 1News.
And it’s not just banks trying to sweeten the deal. Fixed price construction costs are now on offer at Signature Homes on its new builds, at a time when problems finding building materials and labour shortages are resulting in cost blowouts.
Signature Homes’ Gavin Hunt said people find it very difficult to secure loans from the banks if they don’t know what the final cost is. And “customers are hearing the material shortages and supply chain difficulties and that makes people nervous”
Ouellet said potential borrowers, as always, should shop around for the best deal.
“What buyers should look out for is the trade-off between the interest rate they are offered and the deal itself because there are other challenger banks that are offering lower interest rates but don’t have those cashback offers,” she told 1News.
The Reserve Bank will announce its next OCR decision on Wednesday, with the market expecting a 25 or 50 basis points hike, from the current 2%. While some banks have already taken that into account with their interest rates, with the housing market in a state of flux, competition and volatility are tipped to continue, 1News reported.
