Finance And Property – What’s Happening Right Now?

What Is The Property Market Doing?

There is definitely no sign of the housing market cooling. In fact, it appears to be booming more than ever before. Barfoot and Thompson have reported selling 60% more homes in January 2021 than in January 2020.

“This January was the most active January we have experienced as an agency for 17 years,” Barfoot & Thompson Managing Director Peter Thompson said. “Even during the height of the last property cycle we never came close to selling this many homes in a January.” [source]

But it is not only volume that is climbing, prices are climbing along with it. “The value of New Zealand dwellings passed $800,000 for the first time last month, increasing from $788,967 in December last year to $806,151 in January. That was an average increase in value of $554.32 a day.” [source]

It can seem scary when the market is moving so fast. It is easy to feel overwhelmed when you are considering buying or selling property. Which is why it is a great idea to understand your own financial position. Chatting with the team here at Mortgage Suit will allow you to confidently make any decisions when it comes to property. Get in touch with us today.

Will The OCR Change Again?

Since the pandemic began, economists have predicted continuous cuts of the OCR. This made sense with the economy struggling, unemployment rising and inflation remaining stagnant.

However, “unemployment figures today revealed joblessness fell below 5% in the three months to December. Stats NZ data showed a drop in the seasonally adjusted unemployment rate from 5.3% to 4.9%. The surprise figures were enough for ANZ chief economist Sharon Zollner to abandon her prediction of another OCR cut.” [source]

Things are economically better than first feared. It means that the Reserve Bank can take a more patient approach and an expansionary stance. BNZ are even predicting that rates may rise as early as May 2022.

Of course, this will all depend on the state of the economy, but it is good to keep a potential rise in mortgage rates at the back of your mind when making financial decisions in the near future. If you would like some expert advice in this area, then don’t hesitate to contact the Mortgage Suite team.

What Else Is Going On?

Lately, there has been a lot of talk about investors and first home buyers and their activity in the property market. As things continue to boom, banks are starting to take action.

BNZ has joined ANZ by refusing to accept high LVR investor loan applications. Due to unprecedented demand, BNZ has halted investor lending applications unless the borrower has a 40% deposit. A BNZ spokesman said: “With unprecedented demand in the housing market, we are prioritising existing customers and applying a 40% equity requirement for new applications from investors who come via brokers.” [source]

If you are considering an investment property, then you definitely want to seek advice from a financial adviser (like the team at Mortgage Suite) before making any decisions.

A recent study has shown that, the global reverse mortgage market is set to increase threefold in the next decade! “EY’s Global Equity Release Roundtable 2020 survey report reviews data from 13 different markets, and found that the market is expected to soar to $50 billion of equity by 2031.” [source]

It is thought that the increased demand is based on the fact that many people want to stay in their homes throughout retirement, yet simply can’t afford to do so. A reverse mortgage offers them the opportunity to fund the retirement they desire. Again, this is another situation where it is best to seek professional financial advice.

Mortgage Rates

Across the board, mortgage rates have dropped again in the last month. The major banks are all offering 1-year rates around 2.29% if you are bringing a 20% deposit to the table.

But, we should not expect rates to continue to drop in the coming months. In fact, banks are actually predicting a rise in mortgage rates at early as next year.

So, as with any financial decision, it is best to seek advice on your own individual circumstances so that you can ensure you make the best choices. The team here at Mortgage Suite would be happy to help you understand your financial position. Get in touch with us today.

Examples of some of our recent Clients include:

• Apartment construction funding of $35.0m Conditionally approved. This was a case where the client went to every lender via other brokers before contacting us. We are still going through the finalization process but we are hopeful of taking it over the line
• $6.250m funding to assist a client buy a commercial property. We were able to tap into his residential property equities and get the entire loan under residential rates, saving the client over $70,000 pa in interest.
• First Homebuyers, buying off the plans were declined by their bank. We managed to get it approved through another bank and for a higher amount. A very excited couple looking to get into their first home soon.