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Last Article Uploaded: Thursday, October 28th, 5:41PM

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Challenging times ahead for investors: Westpac

The Government’s attempt to skew the housing market away from investors to first home buyers will have a chilling effect on investor demand, says Westpac senior economist Satish Ranchhod.

Tuesday, March 23rd 2021, 1:24PM

“This could mean a significant risk for house prices and economic activity more generally and reinforces expectations that OCR hikes are a long way off.”

Ranchhod says financial factors play a dominant role in determining house prices. And investors account for a large share of the housing market.

“The changes to interest rate deductibility will significantly reduce the financial incentives to invest in housing.”

Before today, house price growth was expected to slow through the back half of the year as mortgage rate rises were forecast.

“The Government’s developments indicate material downside risk to that forecast.”

He says the moves are likely to be a significant drag on house price growth. And this is expected to reverberate through economic activity more generally.

“The housing market plays a key role in shaping economic conditions more generally.

“In particular, growth in house prices tends to be associated with increases in household spending and residential construction.”

He says the Reserve Bank’s OCR hikes are clearly off the table for the foreseeable future.

With a likely slowdown in house prices, the economy’s recovery is likely to be even more gradual. That will make it even harder to generate a sustained lift in inflation.

“The Government is conscious of the need to balance the pace of the economic recovery with its social aims, including ensuring access to affordable housing,” Ranchhod adds.

“These are challenging issues to balance in the wake of the ongoing headwinds from the Covid outbreak and loss of demand due to the closure of the borders.”

Tags: house prices housing market investor lending OCR forecasts property investment Westpac

« Years before changes make any differencePolicy ‘not rooted in reality’ »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▲3.25 ▲3.75 ▲3.99
ANZ 4.59 3.84 4.30 4.54
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 3.24 3.70 3.94
ASB Back My Build 2.04 - - -
ASB Bank 4.45 ▲3.25 ▲3.75 ▲3.99
Basecorp Finance 5.49 - - -
Bluestone ▲3.74 ▲3.54 ▲3.89 ▲4.09
BNZ - Classic - ▲3.24 ▲3.79 ▲3.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay ▲4.70 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.70 ▲3.84 ▲4.39 ▲4.59
BNZ - TotalMoney 4.70 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 ▲4.10 -
Credit Union South 5.65 3.95 ▲4.10 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC ▲4.15 ▲2.89 ▲3.29 ▲3.49
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 4.00 ▲4.14 ▲4.44 ▲4.84
Kiwibank - Offset 4.00 - - -
Kiwibank Special 3.75 ▲3.29 ▲3.59 ▲3.99
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 3.05 3.45 3.75
SBS Bank Special - 2.55 2.95 3.25
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲3.04 - -
The Co-operative Bank - Owner Occ 4.55 ▲3.24 ▲3.70 ▲3.99
The Co-operative Bank - Standard 4.55 ▲3.74 ▲4.20 ▲4.49
TSB Bank 5.34 ▲3.75 ▲4.20 ▲4.44
TSB Special 4.54 ▲2.94 ▲3.40 ▲3.64
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.84 3.79 4.39 4.59
Westpac - Offset 4.84 - - -
Westpac Special - 3.19 3.79 3.99
Median 4.57 3.24 3.70 3.99

Last updated: 28 October 2021 8:59am

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