Spring has sprung! So, what does that mean for the world of finance and property?

Well, on the face of it, lots is the same – there is still reasonably low confidence in the market, house prices are continuing to fall lower and mortgage rates are creeping up.

But, with spring here, there’s hope that things might start turning around soon.

Let’s take a look at what’s going on right now.

Mortgage Rates Are Creeping Up

It wouldn’t be a monthly update without a look at the latest mortgage rates. Last month we reported that rates had been dropping, especially for longer fixed terms, but recently ASB and ANZ have raised their fixed home rates for one-year and 18-month terms. Finding a fixed rate below 5% is nigh on impossible now. [source]

This is interesting given that spring is usually when the housing market picks up and mortgages get competitive. But, the market signs aren’t that flash, so this year may be different.

Because the market isn’t moving as much and people aren’t necessarily buying, banks may think people will be more likely to just stick where they are. So does that mean you shouldn’t be shopping around if your fixed term is up? Not necessarily.

Depending on your situation, it might still be worth looking for a new lender for your next term or even breaking your mortgage to switch. With competition high, banks have begun offering other incentive types, such as cash backs or other options, which might make switching attractive. If you’d like to look at your options for moving mortgages, then get in touch, and we can look at what might work for you.

Spring Bounce Back? Maybe Not This Year

Spring is generally a time that real estate agents look forward to. After the quiet of winter, spring usually signals an uptick in the housing market with more sales. This year though, it might not be quite as good as usual.

ASB’s latest Housing Confidence Survey shows public confidence in the housing market has finally dropped. Now people expect house prices to drop. The survey found 31% more people thought prices would drop than thought they would rise. According to the report, that’s the lowest level of confidence for 13 years. [source]

In the market, the number of homes available for sale is much higher than last year, but prices are still falling. Realestate.co.nz figures for August showed almost double the number of homes for sale compared to last year with stock at a seven-year high. [source]

So, what does it mean if you were hoping to sell? Well, it’s true that you might not get as much for your property as you would have at the height of the boom. But, it also means that it won’t cost you as much to buy property. It’s worth weighing up your options if you need to upsize, downsize or move locations.

Moving Your Mortgage Could Be Getting Easier

If you want to switch your mortgage between lenders, moves by the Government could potentially make it easier. The Government has signalled it is taking the next steps in introducing a data sharing scheme. This would introduce a Consumer Data Right (CDR) to allow people to share data held about them by third parties. [source]

This would mean banks would need to share data about your loan details with a rival lender if you asked them to.

The move could be a while off, but in the long-term, it could make switching loans easier. As always, though, we’d advocate getting expert advice before you make any changes to your home loan. So, if you are considering changes, drop us a line for an obligation free chat.

Rent Freeze Suggested By The Human Rights Commission

The Human Rights Commission has suggested that private landlords should freeze rents amid the cost of living crisis. But, landlords have retaliated saying they shouldn’t have to suffer because of a situation out of their control. 

There was a widespread rent freeze in 2020 due to Covid-19 which most landlords supported, but the idea of another pause has caused concern. President of the New Zealand Property Investors Federation said most landlords were not “fat cats”, but normal people trying to plan for the future who were also facing rising costs. [source]

Generally, most rental property loans are on “Interest Only” basis and we find that lenders are asking for the principal payments to commence whenever the Interest Only period expires. This can create cashflow problems for you as the landlord. So, before you agree to their terms, talk to us first.

So, if you own a rental property, now might be a time to consider what you want to do with it. If you have good tenants and can afford to offer reasonable rents for a time, then it will be worth holding onto it. But if not, you might want to consider what options are available to you.

As always, we are happy to explore what those options could be with you. Get in touch with the friendly team at Mortgage Suite today.