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Last Article Uploaded: Wednesday, October 27th, 6:26PM

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Investors continue to shy away from buying more property

A net 56% of mortgage advisers are seeing fewer investors stepping forward for mortgage advice, data from the First Mortgage Trust and Tony Alexander September survey shows.

Thursday, September 23rd 2021, 10:28AM 1 Comment

This is a weak result, says Alexander, an independent economist.

However, it is in line with the situation from March to June this year.

Alexander says it represents some giving back of July’s improvement, which was itself substantially unwound in August. Most of the replies to the survey came in before the country went into lockdown.

“The result is consistent with those from other surveys showing investor demand has been curbed by the LVR and tax changes announced over February and March this year.”

Lockdown impact apparent

Banks remain as willing to lend on average this month as last month, but there is far more scrutiny being applied to client expenses and income sources than ever before.

Low deposit loans are harder to secure and there is increasing bank wariness of funding some people who are wanting to buy off the plan as costs escalate.

Lockdown has had an impact on the level of enquiry from both investors and first home buyers.

The delay in interest rates going up may have contributed to a slight shift in fixed term preference back towards two years from three years.

But these remain the most favoured terms to fix and there is as much interest now in fixing one year as in fixing five years – virtually none for either term.

Why this lockdown is different

This lockdown is being viewed in different terms than the other two significant events, says Alexander.

“Why? Probably because of the overwhelming evidence that when lockdowns end the housing market surges anew.

“The Government has delayed new responsible lending and other tightened credit assessment criteria until December 1 from October 1 in light of the ability of those involved to get ready.”

He says nonetheless, the willingness of banks to advance finance still sits lower in September than in all other months since December last year bar August.

“Perhaps the important point is there has not been a sudden new tightening up of lender willingness this past month.

“Experience with previous lockdowns has shown that while particular sectors such as hospitality – and construction this time – are heavily affected by lockdowns, the economy and housing market are now known to bounce up strongly when freedom returns.”

For all the surveys last year the overwhelming majority of mortgage brokers reported their clients were most in favour of fixing their mortgage rate for one year.

Alexander says this has been the best strategy since the end of 2008 in New Zealand.

This year things have shifted substantially. Whereas in January 89% of advisers said the one-year term was most in demand that fell to 39% in April, 5% in July, and now only 3%.

The proportion preferring the two year term rose strongly from December through to June but has broadly plateaued since then.

The term becoming most popular is three years. More than 55% of advisers report people favouring three years, down only slightly from 69% last month.

Tags: fixed rate mortgages Mortgage Rates mortgage terms mortgages Tony Alexander

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Comments from our readers

On 24 September 2021 at 3:14 am Kevin Edmunds said:
So just watch rents start climbing again due to rental property shortages as some owners are selling out of the rental market and not enough are coming in- no wonder as this government has gone to war with investors and hate anyone trying to get ahead

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Full Rates Table | Compare Rates

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 4.60 - - -
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 - ▲2.79 - -
The Co-operative Bank - Owner Occ 4.55 ▲2.99 ▲3.60 ▲3.89
The Co-operative Bank - Standard 4.55 ▼3.49 ▲4.10 ▲4.39
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: 27 October 2021 8:49am

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