The current buoyancy in the home finance market is characterised by a number of factors including the entry of more buyers, partly encouraged by flexibility of lenders who accept deposits as low as 5% of the mortgage loan.
Nathan Saminathan, Managing Director, Mortgage Masters Limited in Auckland said that commercial bankers were the biggest competitors to mortgage brokers, since they negotiate rates if their customers have large deposits.
“Banks offer favourable rates to customers with deposits of 20% or more. Of course, lenders are the biggest borrowers and need to pay attractive interest rates to keep their deposits. We therefore do not expect interest rates to remain low very long,” he said.
Demand for homes
He said that the market is also characterised by the unfortunate phenomenon of shortage of housing stock, leading to rise in prices.
“Auckland needs at least 25,000 new houses every year, but we are building only about 10,000 new homes. We currently face shortage of 60,000 houses and hence it is a sellers’ market,” he said.
But Mr Nathan said that since the minimum deposit is just 5%, those seeking loans must prove that they have saved the amount representing that percentage and provide employment history and income details that would be satisfactory to the lending authorities.
Although banks are willing to lend against minimum deposit, market value of the property and the repaying capacity of the proposed debtor, the importance of mortgage broker can never be over-emphasised.
As a Certified Financial Planner and an authorised financial advisor, Mr Nathan strikes the best deal possible for his clients, negotiating with lending institutions. He is also a qualified insurance broker with a diploma in Life Insurance and Associated Life Underwriting.
Customers testify
A number of satisfied customers testify the quality of service that they have received from the company.
Kumar Velambalam, Director of Union Motors Limited based in Otahuhu, Auckland, said that he has always received quality services from Mortgage Masters.
“Such service builds great relationship for my home loan and insurance service. I recommend him and his company to all friends and associates,” he said.
Mortgage Masters justifies its name with services that are among the best in the industry.
The Company boasts of three full-time brokers and a full-time office manager and loan writer.
“We thoroughly enjoy our work and our motto is ‘Helping our clients to achieve financial freedom upon retirement.’ We have been in business in New Zealand for 25 years, providing financial services since 1988 and mortgage broking since 1997. Our comprehensive services include home and business loans, Kiwi Saver and lump-sum investment services and insurance services,” Mr Nathan said.
He said that the market is currently very active and expects the situation to continue over the next one to two years. The costs of building new houses have increased, while existing houses also demand high prices.
Fixing rates
According to Mr Saminathan, We believe that interest rates will rise above 6% in the near future. For this reason, while banks are offering low rates, we advise our customers to get a fixed rate for two to three years.
“We believe that properties are still the best form of investment, although people must realise that the yield would accrue in the long-term and hence must be patient. It is better to deal with a qualified and experienced broker than directly with banks. Brokers are a fantastic source of sound financial advice,” Mr Nathan said.
He invited all those involved in property investments to seek membership of the Auckland Property Association and gain access to hundreds of other property investors and exchange information.
The Association also runs free monthly seminars and meetings.
