Increased first-home buyer activity reported
A recent survey conducted by mortgages.co.nz and independent economist Tony Alexander (pictured above) has collected insights from 69 mortgage advisors across New Zealand, offering a snapshot of the current state of the residential real estate market.
Improvements in lending practices
The February survey revealed significant improvements in how banks manage mortgage applications, with a noted clearance of backlogs and better processing times than at the end of 2024.
Additionally, there appears to be a softening of lending criteria, with a near-record proportion of mortgage advisors observing that banks are increasingly willing to lend.
This easing coincides with a shift in borrower preference towards fixing rates for shorter terms, although there has been a slight pullback, suggesting a cautious outlook on future rate declines.
First-home buyers gain momentum
The number of first-home buyers entering the market has seen a noticeable increase, with a net 52% of advisors reporting more first-home buyer activity, a significant rise from 26% in the last survey.
This uptick is attributed to lower interest rates, which have spurred a surge in optimism and activity among potential new homeowners.
Advisor insights on first-home buyers
- Increased interest and settlement levels due to lower rates.
- Banks are more frequently offering pre-approvals for existing customers.
- Growing flexibility in considering boarder income and high LVR pre-approvals.
- Enhanced leniency towards past payment discrepancies.
Investor engagement in the market
Investor activity has also increased, though at a slower pace compared to first-home buyers, with a net 28% of brokers observing more investor engagement.
Rising operational costs and the challenging tenant market are prompting investors to be more selective, focusing increasingly on new builds in strategic locations.
Observations on bank lending to investors
- Easing of conditions around DTI ratios, though nearing upper limits.
- Removal of the requirement to include rates and insurance in cost calculations for investment properties by most lenders.
Banks show increased willingness to fund
A strong net 54% of brokers reported that banks are more willing to advance funds, indicative of a competitive phase in the mortgage market.
This is further evidenced by the introduction of attractive fixed rate offers, such as a three-year fixed rate at 4.99%.
Refinancing trends
Refinancing interest remains robust, with 38% of mortgage advisors noting an increase in inquiries, aligning with broader interest rate risk management trends observed since early 2023.
Read the mortgages.co.nz announcement or download the report for more information.
