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Home affordability declines

Home affordability has taken a sudden dive in the past months, due mainly to rising interest rates.

Monday, April 15th 2002, 10:59PM

Rising house prices and an increase in interest rates resulted in a downturn in home affordability in New Zealand, according to the latest AMP Banking Home Affordability survey. The sudden 4.7% downturn in the March 2002 quarter followed a record high in affordability in the December 2001 quarter.

The New Zealand Median Dwelling Price rose 5.6% over the quarter to a record high of $186,000. Home sales soared to a six-year high for monthly sales (8,733) in February. The other key factor in the home affordability decline was the end of the steady drop in interest rates marked by the Reserve Bank raising the official cash rate 0.25%.

AMP’s Head of Retail Banking, Michael Guggenheimer said, "While house prices and interest rates are rising again, the home buying environment remains positive. There is plenty of choice for buyers in terms of properties and types of mortgages. Today’s low inflation economy means the risk of high interest rates has diminished and home owners should weigh up carefully the options of fixed or floating interest rates."

Seven of the 11 regions surveyed recorded a quarterly decline in home affordability. Otago recorded the steepest decline (6.3%) followed by Southland (5.6%), Hawke’s Bay (4.9%), Auckland (4.7%), Manawatu/Wanganui (4.6%), Canterbury/Westland (2.1%) and Waikato/Bay of Plenty/Gisborne (0.4%). The remaining four regions all recorded a slight improvement in home affordability, apart from Taranaki which recorded a 9.8% improvement in affordability.

However, all regions recorded a strong improvement of 17.6% in the 12 months to March 2002. Northland and Canterbury/Westland recorded the highest improvements for the second consecutive quarter (26.4% and 24.9%) followed by Taranaki (22.9%), Manawatu/Wanganui (21.3%), Nelson/Marlborough (21.1%), Waikato/Bay of Plenty/Gisborne and Wellington (20%), Auckland (19.7%), Southland (17.6%), Otago (16.2%) and Hawke’s Bay (13.6%).

Median Dwelling Prices lifted over the year in all regions except Northland and Canterbury/Westland which both recorded price declines.

Southland remains the most affordable region followed by Taranaki. Auckland scores consistently as the least affordable region in the country.

Graham Crews, Senior Lecturer in Real Estate at Massey University said, "Home buyer activity has been steadily improving over the past 12 months. This is clearly shown in the number of house sales in February (8,733) reaching a six year high. Quarterly sales reported by the Real Estate Institute were also up significantly by 39.4%."

Percentage Change in

Mortgage Affordability

In the last quarter

Percentage Change in Mortgage Affordability

in the last 12 months

Region

Improvement

Decline

Improvement

Decline

Northland

2.2%

-

26.4%

-

Auckland

-

4.7%

19.7%

-

Waikato/Bay of Plenty/ Gisborne

-

0.4%

20%

-

Hawke’s Bay

-

4.9%

13.6%

-

Manawatu/Wanganui

-

4.6%

21.3%

-

Taranaki

9.8%

-

22.9%

-

Wellington

3.7%

-

20%

-

Nelson/Marlborough/Kaikoura

2.4%

-

21.1%

-

Canterbury/Westland

-

2.1%

24.9%

-

Otago

-

6.3%

16.2%

-

Southland

-

5.6%

17.6%

-

New Zealand

 

4.7%

17.6%

-

AMP Banking Home Affordability Survey

The quarterly report is prepared for AMP Banking by Massey University’s Real Estate Analysis Unit. It combines data on housing prices, mortgage interest rates and average weekly earnings to produce a home mortgage affordability index indicator. The survey, conducted since 1988, uses data information supplied from Statistics New Zealand and the Real Estate Institute of New Zealand.

Further information can be obtained by accessing the AMP Banking Home Affordability Report on www.ampbanking.co.nz or on http://property-group.massey.ac.nz/mureau/mureau.htm

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 3.95 4.15 4.49
ANZ Special - 3.45 3.65 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
Lender Flt 1yr 2yr 3yr
China Construction Bank Special - 3.19 3.19 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.65 4.80 -
HSBC Premier 5.24 3.54 ▼3.20 3.69
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank 5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Lender Flt 1yr 2yr 3yr
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
Lender Flt 1yr 2yr 3yr
TSB Bank 6.09 4.19 4.35 4.69
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society 5.50 3.95 4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.96 4.09 4.39

Last updated: 14 February 2020 10:02am

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