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Rate cuts needed to lift mood

The enthusiasm that followed the change in government, mainly from property investors, has waned as homeowners and buyers hang out for interest rate cuts, says Kiwibank.

Wednesday, April 17th 2024, 9:42AM

While the government’s housing tax policy changes are a positive, interest rates will play a big role in where the market goes in the next few months.

Kiwibank chief economist Jarrod Kerr says interest rates may rise a little more. And then they may fall, later in the year.

Anecdotes from Kiwibank’s mortgage managers and client base were positive towards the end of last year, he says. 

“Now we’re all waiting. It’s hard to get too excited when the rampant rise in interest rates is still feeding through.”

Kerr expects the market to regain momentum. But it may take a rate cut. And Kiwibank is not expecting one until November.

“Rate cuts are needed to encourage investors to invest, developers to develop, buyers to buy and of course sellers to sell.”

Meanwhile Westpac expects the softness in the housing market to gradually give way to a period of stronger activity, underpinned by a multi-decade high in population growth and a lift in investor sentiment.

However, until the bank sees mortgage rates drop back, the market is likely to remain moribund.

REINZ chief executive Jen Baird says agents are seeing activity among a range of buyer groups, with first home buyers and owner-occupiers moving into bigger homes or downsizing being the most active.

She says this summer the market has returned to a more normal level after being relatively slow and subdued last year.

“Reasons for this will vary; for example some vendors may prefer not to wait any longer and are willing to ‘meet the market’ with their price expectations. Some buyers may want to act now ahead of potential further lifts in sale prices or potential increased competition for properties as upcoming changes bring the bright line test back to two years and the reintroduction of interest deductibility on investment properties are expected to draw some investors back to the market in the next few months.”

Baird says the economic environment with higher interest rates and some uncertainty in the jobs market will mean some buyers remain cautious with prices still off their peaks from a couple of years ago. However most agents are cautiously optimistic market activity will continue to pick up during the cooler months.

Tags: Mortgage Rates

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 11 July 2024 1:26pm

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