Non-bank says two positive trends will soon come to fruition
Despite being hit by interest rate hikes and inflation, the mortgage industry’s future is looking bright, according to CFML Loans executives Patrick Middleton and Johny Kale, as they encouraged advisers to brace for an upswing in applications.
Middleton (pictured above left), CEO of the Auckland-based non-bank lender, said a couple of positive trends in the market will soon come to fruition for advisers.
One is that first-home buyers may be considering recent views by economic commentators regarding property prices probably being at their lowest level, the many grants on offer to assist their home purchase, and FHBs being able to access their KiwiSaver account balances to help enter the property market.
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Middleton said CFML Loans believes that while FHBs are not necessarily buying, they might be deciding at what point, with their salary and outgoings, can they afford to take on a mortgage.
Another factor is that investors may be reaching the same conclusion about property prices hitting the bottom and considering if they can afford to repay a mortgage at the current interest rates, knowing that they’re probably going to come down.
Middleton said many investors are currently in a holding pattern, on the lookout on who will come into power after the election and for clarity on interest deductibility rules.
“National has indicated that it would withdraw the prohibition on deducting interest and take the law in this area back to what it was previously,” he said. “The first-home buyers are probably waiting to see if the Reserve Bank of New Zealand is done [with interest rate rises] so that they’re not stung with further increases.”
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Middleton said the market may be quiet for now, but for advisers, it’s all about their pipelines – a sentiment shared by Kale (pictured above right), COO of CFML Loans.
“It’s future business for them; they have to continue to communicate with and cultivate their clients. Things will change – it’s not if, it’s when,” Kale said. “I think it’ll change quite quickly as well. If there is a change of government, I believe it is likely there will be more property transactions before Christmas than if we continued with the current government.”
There’s another way advisers can add value for customers, who in the last few years have put deposits down on new builds that are now coming up for settlement, Middleton said. Some of those valuations varied a lot from the purchase price, and advisers can assist those who need additional capital in existing property to allow those settlements to occur, he said.
Some advisers are completing loan applications subject to finding the most suitable property.
“It doesn’t matter whether it’s a first-home buyer, a second-home buyer, or an investor, they know that – subject to enquiries into the consumer’s circumstances and responsible lending checks – they should be able to get finance from someone like CFML Loans today,” Middleton said. “They just want to find the suitable property to transact on, and the timing to do it, so this gives them comfort.”
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