The Current Financial Position Explained – January 2020
Strong Mortgage Lending
According to the latest figures from the Reserve Bank, mortgage lending was very strong in December.
“At $6.53 billion, total mortgage lending last month was more than $1 billion higher than December 2017 and 2018, according to new RBNZ statistics. A total of $5.3 billion was borrowed in December 2018.
While total lending was down on November’s $6.7 billion, the figures underline a resurgent housing market, boosted by record-low interest rates, in the final months of 2019.
With the exception of November 2019, last month marked the highest mortgage lending figures since May 2018.” [source]
It is thought that the reduction of the OCR and the government’s withdrawal of the proposed Capital Gains tax has generated a bit of a property boom. The market is strong and with such low-interest rates, now is a great time to make your next move in property.
Buyers are ready and willing with the cash, so it is a great time for sellers. But it is an equally good time to purchase if you are a buyer with these historically low-interest rates in play. The first step is to assess your own financial position. And the easiest way to do that is to contact an expert financial adviser like the team here at Mortgage Suite. Give us a call today!
Will The OCR Drop Again?
Back in August 2019, the Reserve Bank shocked the financial world by cutting the OCR to just 1%. This shock move created predictions and speculation about what their next move would be. Many predicted that the OCR would fall further in an attempt to boost the economy.
But November came and went without a further reduction. And now predictions are starting to change.
“The improved economic outlook prompted ANZ to change its OCR outlook last week. The bank now predicts rates will stay on hold, and no longer believes the Reserve Bank will slash rates in May.
“We take some comfort from the fact that the recent stabilisation has been fairly broad-based. To be sure, it’s not a picture of growth taking off by any means, but thus far it appears consistent with the RBNZ’s November MPS forecast for a gradual improvement in growth into 2020,” ANZ said last week.” [source]
What that means is that the current interest rates are set to stick around for awhile longer yet.
Will House Prices Rise In 2020?
The question on everyone’s lips is whether or not house prices will rise in 2020. The answer is… most likely. Leading economist Tony Alexander say all signs point to an increase in house prices as the year continues.
“Net migration numbers are strong and only slowly falling,” Alexander said. “Interest rates look like staying low for ages. The jobs market is strong. Consumer confidence is good. Export commodity prices are firm. World growth looks okay if unspectacular. Fiscal policy is easing. Capital gains tax plans got squashed. Rents are rising strongly, especially at annual review time now. Airbnb is taking up more housing stock,” he added.
Advisers and market commentators predict a strong start to 2020. According to the latest REINZ data, December was the busiest final month of the year for house sales for three years. The REINZ House Price Index increased by 6.6% nationwide last year.” [source]
The good news is that if you are buying and selling in the same market, you are largely unaffected by rising house prices. If you are new to the property market then don’t despair. There are still plenty of opportunities to get on the property ladder.
And the Mortgage Suite team can help you do it. Give us a call today to see where you stand when it comes to your finances and what the property market has to offer for you.