Industry also saw fall in number of investors seeking mortgage advice
Mortgage advisers have seen a dramatic decrease in investor activity over the past month, according to economist Tony Alexander & mortgages.co.nz's monthly mortgage adviser survey.
Alexander’s latest survey showed that a net 78% of respondents noted a decrease in investor activity in April following the government’s announcement of the new housing package, underlining the ongoing uncertainty facing advisers as new regulations are imposed on the sector.
Meanwhile, a net 55% of respondents reported a decrease in the number of investors seeking mortgage advice.
The latest figure marks a slight improvement on previous months but “clearly signals substantial wariness on the part of investors,” Alexander said, as reported by Good Returns.
He added that interest deductibility removal and the bright-line test extension, along with the expected increase in interest rates, would most likely take the heat out of the market. While a better understanding of tax changes could slow down the pace of investor withdrawal, many factors imply that the trend will continue to spiral down.
“Discussion about rising interest rates is growing, and the Reserve Bank is to be given the ability to use debt to income lending restrictions in future years. This implies a structural easing off of investor demand,” Alexander said.
A third of the respondents claimed that banks had become more willing to lend, down from 36% in May – which Alexander said appears to “continue to a broad upward trend which started in April.”
Borrowers are less likely to pick a one-year fixed rate – with only a gross 30% saying the one-year term is the favourite of borrowers, down from around 70% in February. Meanwhile, 30% of advisers claimed that three-year terms have become popular among borrowers, the survey said.
