That is, before the Reserve Bank reconvenes on Feb. 22
“Those borrowing to buy their first or next home have six weeks of likely interest rate stability, so now could be a good time to pounce,” said Tim Kearins, owner of Century 21 New Zealand.
Kearins made the statement ahead of the Reserve Bank reconvening on Feb. 22 to review the OCR. In its last review in November, RBNZ lifted the OCR by 75 basis points, taking it to 4.25% – its highest level since 2008 when it hit 8.25%. It has forecasted a peak of 5.5% this year.
“Without doubt, rising interest rates will put a lot of pressure on many homeowners this year,” Kearins said. “However, we must keep it in perspective. When you review interest rates in New Zealand over the past decades, for now they’re not out of the ordinary.”
Kearins said that historically, Kiwi borrowers had the average of about 6% to 7% rates – and that’s where most fixed rates with the major banks currently sit.
“The Reserve Bank has given everyone plenty of notice where interest rates are heading in 2023,” Kearins said. “Given we’re effectively still on 2022 rates, this summer could prove to be a good time to lock in a reasonable rate for a property at a reasonable price.”
He said all eyes will be on REINZ’s release of December’s sales prices and volumes next week. November figures showed a lift in activity nationwide, with the number of sales jumping by nearly 8% from October.
“The market is softer and slower overall this summer, but there are still pockets within cities and around the country that are bucking the trend,” Kearins said. “If you’re contemplating buying or selling, a good real estate agent will tell you where the opportunities are.”
Kearins also urged prospective buyers struggling to get finance, or a good rate, to ring a mortgage broker.
“Kiwis are increasingly looking beyond the big banks. Often mortgage brokers can deliver more competitive rates and greater borrowing flexibility than the traditional lenders,” he said.
Among the economic doom and gloom, he said there are some positive things which will help both buyers and sellers, including the slow return of migration and last year’s changes to First Home Grants and First Home Loans, which provides more Kiwis access and support to get into their first home.
“This summer many tenants sick of paying record-high rents will hit the mortgage calculators,” Kearins said. “If they can cobble together a deposit, many will be keen to get on the ladder before increasing interest rates only make homeownership harder.”
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