Survey reveals boost in new buyers across nation
A new mortgage adviser survey has revealed first home buyers have well and truly returned to the market.
Meanwhile, the decline in investor requests for mortgage advice has nearly ended.
Independent economist Tony Alexander (pictured above) partnered with mortgages.co.nz for the latest edition of the Mortgage Advisers Survey – September 2022. The survey asks mortgage advisers around the country about developments into the residential real estate market. There were 68 mortgage adviser responses in the latest survey.
“For the first time since August last year, more mortgage advisers reported seeing first home buyers looking for assistance,” Alexander said. “This month, that net positive proportion has jumped from 8% to 47%, which is the highest reading since our very first survey in June 2020 and tells us clearly that first home buyers are back in the market.”
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Alexander said changes to house price limits relevant to accessing government grants and loans had brought purchasing a home within reach of many people.
“Fears about high interest rates may also have eased slightly,” he said. “At heart though, it is entirely possible that with houses on average around the country now 12% cheaper than at their peak and with increasing talk about picking the bottom in the market, many young people have decided not to take the risk of waiting too long and seeing listings potentially dry up again as they did last year.”
Alexander said first home buyer lending was still hard to obtain from the main banks.
“However, with the property caps removed for first home loans, there are many advisers working on multiple first home loan applications,” he said. “Some main banks have opened up to their own clients, but the criteria are tough.”
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Alexander said the latest survey found more mortgage advisers reported investors were stepping back from the market rather than stepping forward.
“With a net 5% negative, this reading of investor property interest is the least negative since February 2021 and well improved from a net 33% negative in August and 62% in June,” he said. “Mortgage advisers told me rental income continues to be scaled back heavily which is mismatch of some lenders counting rates and insurance as an expense (on top of scaling back rental income) vs others who do not continues.”
Alexander said 58% of mortgage advisers revealed the most preferred period of time for fixing an interest rate in the current climate was one year.
“Meanwhile, 41% say that the two-year term is most preferred by borrowers apart from 1% saying the three-year term is favoured, none note any interest in fixing for longer than two years,” he said.
“The preference for fixing one year has been on an interesting path this past year, but the preference for this short term was noted by almost 100% of advisers late in 2020. Things slowly edged lower until interest fell to almost nothing from July last year when rates jumped up in anticipation of the Reserve Bank tightening monetary policy.”
