Top-ups harder to come by, says mortgage adviser
An Auckland mortgage adviser says many clients who are looking to top up their mortgage for a cash boost are struggling as interest rates continue rising.
Naylon Cassidy (pictured above), a financial adviser at Float Mortgages and one of NZ Adviser’s Top Advisers for 2022, said proving debt servicing for a lot of clients was increasingly difficult in the current rising rate environment.
“More and more people are struggling to service their existing level of debt, let alone being able to service a top-up,” Cassidy said.
“For those looking at refinancing or restructuring their existing mortgage, they are concerned given the uncertain environment we are experiencing. At the moment, for certain clients (business owners in particular) we are focusing on clients’ cash flow and keeping debt repayments at a minimum and looking at options such as putting in extended interest-only terms and extended loan terms if suitable.”
Cassidy said many Kiwis were battening down the hatches when it came to keeping their cash flow and expenses in check, following ninth consecutive official cash rate rise in November, taking the OCR to 4.25%.
“It is a similar attitude people had during the first COVID-19 lockdown and is a trend we are seeing on the commercial side of the business,” he said.
Cassidy is an ex-commercial banker and spent time working at BNZ and HSBC. He said he was seeing a trend of particular banks not servicing their business clients well enough and that was presenting good opportunities for brokers to step in and help out.
“There are a lot of relationship manager and re-segmentation changes for clients to have to navigate through within banks, particularly in Auckland, so I believe this is a good opportunity for brokers to slide in alongside and provide that relationship which makes for a good point of difference,” he said.
“From what I am hearing, banks are starting to see an uptick in credit appetite which is reflective of their low volumes of new customers, so them wanting to lend more is a positive sign.”
Cassidy said people who had been absent from the market for the past two to three years were now returning and were actively searching for bargains.
“The general consensus is it is a buyer’s market at the moment, despite lender interest rates sitting around 6.5%,” he said.
“People are prepared for it and smart operators are seeing opportunities and the value of getting into the market now. They are comfortable with the current rate and are envisaging going forward believing the market has peaked and will slowly reduce. I believe property values will increase slowly after this point, so now is a good chance to buy and build equity if you can get into the market.”
Cassidy said the value proposition of a mortgage adviser was continuing to grow.
“We have definitely seen an uptick in the adviser channel because people see the benefits we provide as we are flexible and provide far more product and advice options than a single provider such as a bank,” he said.
“Despite the doom and gloom, there is some positive in the market now as people want to know what the next six to 12 months will look like. 2022 has been a tough year for many, however, it is important to try and remain optimistic.”
