The truth about mortgages, interest rates, the housing market and everything else the media likes to sensationalise!

by Aug 1, 2019Mortgages, Non-Bank Lending

 

‘House prices down’ ‘First home buyers finding it impossible’ ‘Investors exiting the market’

Such headlines are gross exaggerations and often blatant misrepresentations of the truth.

The Housing Market

This is flat, but stable.

QV (NZ’s leading provider of rating and valuation services) predict that while sales volumes will be negatively affected by house prices, it will be positively affected by low interest rates, so the net result will be no real change.

The annual total numbers of houses sold for 2019 is expected to be 85,000 to 90,000, which is in line with the average for the past decade.

So, is this is a media manufactured problem?

Prices

Some regions are still rising and others falling, but the changes are small.

Auckland has stabilised as both buyers and sellers are biding their time to get the right price.

No one is predicting any more falls, the ‘correction’ having already happened. Correction is the right word, as all that happened is the rise in prices stalled – they didn’t actually fall!

There simply aren’t any pressures for price falls. Low interest rates, too much equity at stake for some sellers and a desire to live in certain suburbs, will keep prices stable, not to mention high levels of net immigrants.

Interest Rates

Interest rates are low, incredibly low, and expected to stay this way for some time. Some commentators predict even lower to come, as the economy has slowed, but if it does, the drop will be tiny.

This should not be an influence when taking out a mortgage, as how you structure it is far more important than the nominal interest rate.

Property Investors

Property Investors went into a flap earlier this year with the possibility of Capital Gains Tax (CGT), the imposition of Healthy Homes insulation and the tax ring-fencing for losses, not to mention laws that tend to favour the tenant.

But that has all passed, with CGT a non-event, responsible landlords attending to insulation and most undertaking due diligence when finding good tenants.

The ‘Foreign Buyer Ban’ had its main impact on Central Auckland and Queenstown properties, but little anywhere else.

Rental Yields

Rental yields to continue to rise (albeit from a low base), as rental growth continues at about 5% annually.

It’s a market that is bouncing back.

Mortgage Lenders

This is the biggie!

Banks are being asked to fund additional capital, which according to QV, could impact on differing mortgage rates to borrowers, based on their ability to service debt.

At the same time the LVR (Loan to Value Ratio) may move from requiring a 20% deposit down to 15%.

However, banks are tightening up in several ways, but there are alternatives.

The Rise and Rise of the ‘Non-Bank’ Lender

‘Non- bank’ is a highly misunderstood term.

It defines any Lender who is not a mainstream Bank and there are many.

We often get the comment, “but are they safe”?

Our answer is, “well you have their money, so does it matter?”

Seriously, we are not that flippant, but they are becoming a very strong group in the lending market.

Their criteria for lending vary, but they don’t follow the strict rules of the banks.

This group of lenders is growing fast, as they will consider each application on its merits, so ask us more about them.

In Summary

Stop reading the doom and gloom in the press!

The market is fine, prices are stable, interest rates are amazingly low, property investment is most definitely a goer and there are a lot more options than the mainstream Banks to borrow from

For an unbiased and free chat to see what we can do for you, please call us on:

0800 LENDER or email help@ilender.co.nz

or

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About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

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