Banks' willingness to lend helps buyers
Credit availability has improved in New Zealand, according to a mortgage adviser survey conducted last month.
Independent economist Tony Alexander and Mortgages.co.nz’s survey of 49 mortgage advisers revealed bank willingness to lend had solidly improved over the past two months. The April survey showed a two-year loan term was increasingly favoured by borrowers, first home buyers were becoming less inclined to not purchase and bank implementation of tightened lending rules remained highly variable.
Alexander (pictured) said he had seen a further slight easing in the net proportion of mortgage advisers observing first home buyers stepping back from the market.
“The result – a net 8% is still negative but it is the least so since October last year,” he said.
“That was the month just before banks started pulling loan pre-approvals because of worries about breaching new loan to value Ratio rules, and before the CCCFA changes became effective in December.”
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Alexander said things had come a long way since the initial days of the pandemic when many people tried to purchase property all at once.
“First home buyers initially led the rush towards the end of the first nationwide lockdown in 2020, but investors quickly took over as they saw prices were not falling as had been expected,” Alexander said.
“The sharp jump in prices, then return of LVRs from February 2021 meant many first home buyers were taken out of the market before this time last year.”
The economist said the next changes that affected first home buyers were the newly tightened LVR rules and CCCFA alterations in November and December last year.
“The credit crunch created by these changes prevented many first home buyers from making a purchase and as word spread of new financing difficulties, these buyers stopped making enquiries,” Alexander said.
“Now, there is an easing in the credit crunch underway as credit access is becoming less of a barrier to first home buyers making a purchase.”
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Alexander said comments submitted by advisers for the survey indicated the implementation of CCCFA rules remained inconsistent between the banks, and credit availability overall to first home buyers was tight.
“Some easing is evident including greater availability of low deposit lending,” he said.
From the independent advisers surveyed, for the first time since June last year there were more advisers reporting that banks had eased their lending criteria than those reporting a tightening.
“This likely reflects the passage of time away from introduction of tougher LVR and CCCFA rules and banks coming to grips on how to more reasonably apply such rules,” Alexander said.
