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The New Zealand Property market has always displayed seasonal trends; winter is cooler, and summer is hotter; so, what is different about this seasonal heat?
All the usual main drivers of activity and demand across the market are present.
Spring through Summer is when vendors typically like to bring their properties to market and while that is no different, consumers are now able to access home loan rates not seen for 70 years.
Easing restrictions
Add to that the recent second easing by the Reserve Bank of New Zealand (RBNZ) of the Loan-to-Value restrictions, not just for owner-occupied residential but also for residential investment.
Banks will now be able to provide 20% of their owner-occupier loans to borrowers with a deposit of less than 20%.
Lenders will be able to allocate 5% of new investor loans to borrowers with less than 30% deposit. In addition, consumer demand for housing remains high, particularly as prices in the Auckland market have come off over the last 12 months.
The above is well-known and well-reported.
Market challenges
What is less known is that despite these positive indicators from a borrower’s perspective, it is a challenge to get the mortgage you want in today’s market than it was two years ago.
The main underlying lending criteria and UMI (Uncommitted Monthly Income) calculators mean that borrowers must present themselves as much better ‘risk’ to the lender than before. Where lenders’ UMI calculators would have indicated a probable approval for a loan in the past, the same income (run through a UMI calculator) today may not see the loan be approved.
Credit Checks
It is important to get access to quality independent advice early when seeking a mortgage.
Many people do not realise that every time they make an application to borrow, it generates a personal credit check.
Every such check puts a negative dent in your credit score which influences your credit rating. The rating gets worse with increasing applications, with increased likelihood of further rejections.
The right advice will guide you only to the lenders who are likely to support your loan application, based on your unique circumstances and needs.
Low interest rates
While interest rates are at historic lows and lenders certainly compete for customers on price, there are more things that should be taken into consideration.
The fine print counts.
All lenders advertising on rate pricing will clearly state “Lending criteria Ts and Cs apply.”
A good adviser will be very clear on those Ts and Cs behind the price and ensure that the mortgage solution for you is sustainable and in line with what you are seeking to achieve without backing you into a corner.
So, the summer looks to be a good one.
Our advice is to stay safe in the Sun.
Global Finance – your best interest.
The above article, was sent to us by Global Finance.
