Bank lending is up and the OCR is coming down.

What does that mean for the property market? Will we finally see it start to recover? When is a good time to make your next property move?

Let’s look into the answer to all those questions now.

Bank Lending Is Up

Thanks to lower interest rates and the number of houses for sale, lenders are seeing a higher demand for mortgages during the beginning months of 2025. In fact, over the last 6 months, mortgage demand has increased for the first time since 2021.

So, what is causing this surge in lending?

Some of it is down to borrowers switching providers to secure better interest rates. But not all of it! Both owner-occupiers and investors are getting in on the action as market sentiment is improving gradually. The rebound for loans is expected to continue for the next 6 months as there is an expectation of further rate cuts and we start to see rising house sales.

While we have seen modest increases in lending, poor economic conditions and higher unemployment rates are still applying the brakes on a full recovery in mortgage credit demand. Many banks are saying that a broad recovery in the economy is required before we see more meaningful increases in lending, yet the outlook is currently muted thanks to domestic and global uncertainty.

KiwiSaver Is Down

US President Donald Trump’s tariff war is having an impact on KiwiSaver balances. After declaring a 10% baseline tax on all imports and enormous taxes on other individual countries like China, global share markets fell into a bit of a freefall. It created extraordinary volatility and uncertainty in bond, equity and currency markets.

As a result, many people saw their KiwiSaver balances slump. This is not great news for first home buyers who rely on those KiwiSaver balances to help with their deposit.

The solution? It’s time to get some advice! If you are concerned about the dip in your KiwiSaver balance, then chat with a trusted financial advisor or your KiwiSaver provider. It may be appropriate to switch your KiwiSaver balance to a more conservative fund, especially if you are trying to preserve the value for a house deposit, but your KiwiSaver Adviser will be able to advise you on what best fits your circumstances.

Even if your KiwiSaver balance has taken a bit of a dive, there are still good lending options for first home buyers. All banks have 10% or even 5% deposit options available. They could be a solution for your situation, so let’s chat about it.

OCR Is Also Down

KiwiSaver balances aren’t the only things that have dropped lately. The OCR has also. And it is expected to reduce even further. Previously, it was expected that the OCR would hit a low of 3%, but now major banks are predicting further cuts in August and October with a new expected low of 2.5%.

Thanks to persistent uncertainty on the global trade front and a “murkier” outlook for global growth, it is thought that our economy will need more support from monetary policy to ensure a recovery remains on track.

Whether the proposed reductions will significantly impact mortgage rates remains to be seen. It is thought that current longer term rates are already at a low point and could even rise in 2025. So, it really is time to pick a mortgage strategy now. Floating, six-month and 1-year rates are likely to go lower in the coming months, but as the Reserve Bank is nearing the end of its easing cycle, thinking about fixed terms now is essential.

What Is The Property Market Doing?

The OCR is down, as are mortgage rates, and unfortunately, house prices are down too. Recent figures from the Real Estate Institute of New Zealand show that the median house price has dropped 1.4% in the last year to settle on $790,000.

But, it’s not all bad news! National house sales counts are up 12.8% since March 2024, which does show a positive shift in the market. Lower interest rates and relatively low house prices are likely to thank for this shift.

Currently, we are in a buyer’s market with higher stock levels and longer selling times. It means buyers have more choice and negotiation power which results in softer price growth across the country. But, with recent and proposed OCR cuts on the cards, the market is looking to lift gradually in the coming months.

Better interest rates and improving buyer confidence will support more balanced conditions in the property market as the year progresses, hopefully resulting in a slow but steady recovery.

Is Now The Time?

With interest rates dropping and the property market recovering modestly, is now the time to make your next move? Well, it all depends on your current circumstances.

We welcome the opportunity to chat with you about your options when it comes to your current or future borrowing. Get in touch with our friendly team today and we’ll help you establish whether it is the right time to take your next step with property.