Economist highlights latest market trends
The latest mortgages.co.nz and Tony Alexander Mortgage Advisers Survey for July 2024 revealed a cautious market sentiment among buyers.
First-home buyers backing away
A net 7% of mortgage brokers reported seeing fewer first-home buyers making enquiries, a deterioration from a net 2% negative last month and the weakest result since January last year.
“This measure is now well away from the net 46% positive result in February,” Alexander (pictured above) said.
Bank lending scrutiny and higher minimum expense calculations are making loan approvals harder for first-time buyers.
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Investor activity slightly up
A net 9% of advisers have reported seeing more investors looking for advice, a small improvement from a net 7% last month. However, this is still well down from the recent peak of 42% in December last year.
Alexander attributed this to job insecurity among young buyers and hopes of counter-cyclical purchasing by investors. The easing of minimum investor deposit requirements from 35% to 30% has also contributed slightly.
Increased scrutiny on lending
Comments from advisers highlighted the increased scrutiny by banks on build reports and affordability.
“Some banks are really scrutinising build reports nail for nail,” said one adviser.
“Affordability calculator changes reflect now higher minimum expenses making loan approvals harder,” another said.
Lengthy processing times
Application processing times with banks have significantly increased, impacting perceptions of bank willingness to lend.
“Only a net 5% of mortgage advisers are saying now that lenders are becoming more willing to advance funds,” Alexander said.
This outcome is a sharp decline from a net 28% in June and 43% in February.
Short-term fixes preferred
Due to expectations of an imminent easing in monetary policy, 86% of brokers say borrowers are opting for a one-year term or less, with six months being popular.
“Only 10% say fixing for two years is preferred,” Alexander said.
Increased refinancing enquiries
A net 29% of mortgage advisers reported that borrowers are increasing enquiries about refinancing. Many are moving from rates near 3% to new rates above 6.5%, driving a greater focus on saving through refinancing.
“Cashflow strains from higher council rates and insurance premiums may be driving these enquiries,” Alexander said.
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