Economist reveals mortgage market insights for March
After the latest Reserve Bank rate cut, the recent mortgages.co.nz and Tony Alexander Mortgage Advisers Survey highlighted increased activity in the real estate market, affirming New Zealand’s strong buyer-oriented market stance.
The survey, garnering responses from 70 mortgage advisors, noted that while activity levels have increased, banks are taking longer to process applications.
Shifts in buyer and investor dynamics
The survey indicated a marked increase in first-time home buyers entering the market, maintaining strong numbers similar to previous months.
“A net 49% of the mortgage advisors responding in this month’s survey have reported that they are seeing more first-home buyers in the market,” said Alexander (pictured), an independent economist.
This trend persists despite the introduction of new debt-to-income (DTI) constraints, which seem to affect more investors than owner-occupiers.
Investor interest on the rise
Despite DTI challenges, investor activity has also seen a significant boost, with a net 46% of brokers reporting an increase in enquiries.
This uptick is attributed to the low interest rates, although the enforcement of stricter DTI ratios by banks has begun to pose challenges, particularly impacting how much investors can borrow relative to their income.
Lending environment becoming more favourable
There’s a notable shift towards more accommodating lending practices, with a net 44% of brokers observing that lenders are becoming more willing to advance funds.
This is reflected in the aggressive rate discounting for shorter fixed-term mortgages, signaling a more competitive environment for borrowers.
Changing preferences in fixed rate periods
The survey also shed light on the shifting preferences for fixed mortgage rates.
While one-year fixed rates were previously popular, there has been a pivot towards two-year terms, with 43% of respondents noting this as the preferred term, marking a substantial increase from just 4% one month ago.
Refinancing interest peaks
Additionally, more property owners are considering refinancing options, with 53% of mortgage brokers reporting an increase in refinancing inquiries.
Many borrowers are looking to capitalise on lower rates as they transition from higher rates, keen to reduce their monthly payments.
