Survey shows shift to short-term rates, softer lending rules
The latest mortgages.co.nz & Tony Alexander Mortgage Advisers Survey, gathering insights from 54 mortgage advisers, has indicated a slight dip in buyer interest for residential properties, a gradual relaxation of bank lending criteria, and a strong preference among borrowers to fix interest rates for one year or less.
First-home buyers: A mixed picture
The survey revealed mixed signals regarding first-home buyers’ activity, with a net 24% of advisers reporting an increase, a decline from the previous month's robust 46% and roughly on par with the net 21% reported in our early December survey.
“Consistent with measures in my other surveys and indicators from other sources, there has been some cooling in the intensity of buyer demand in recent times,” Alexander (pictured above) said.
Advisers noted increased bank flexibility for first-home buyers, including more lenient UMI requirements and slight relaxations for high LVR borrowers. Banks are now more open to low deposit loans and show a growing willingness to assist first home buyers in entering the housing market.
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Investor interest steady but cautious
Investor engagement in the market is steady, with a net 26% of mortgage brokers noting more investors seeking advice. Despite the overall soft buying activity, there’s a sustained interest from investors exploring opportunities in the real estate market, the survey found.
Advisers noted changes in bank lending to investors with adjustments to investment income assessments, easier affordability criteria, a steady increase in investor inquiries, and simplified calculations for investment property expenses in debt servicing, including debt-to-income (DTI) considerations.
Lending criteria loosens gradually
According to the March survey, banks are gradually relaxing their lending standards, a move that could encourage more participants in the housing market. The net percentage of lenders willing to advance funds has dropped to 24% from 43% last month.
Despite a perceived softening in banks' willingness to lend, Alexander sees this as part of the market’s natural fluctuations.
“In the context of the past year this is a small decline and we have seen similar readings before but without the drop being sustained,” he said.
Preference for short-term rate fixing
Brokers overwhelmingly reported a preference among borrowers for fixing rates for one year or less, with 90% indicating this trend and only 10% favoring a two-year fix.
Interest in fixing for periods longer than two years has vanished, marking a significant shift from previous preferences for longer-term fixes. This trend underscored a clear move away from the once-popular two-year fixed rates.
Refinancing interest grows
The report also highlighted a growing interest in refinancing, with a net 33% of brokers reporting increased inquiries.
“This perhaps reflects the strains which people are under and the natural desire to try and find debt cost savings,” Alexander said.
Download the full report here.
For the media release, click here.
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