Only One Way From Here

Are we at the bottom of the market? Nathan Miglani, Managing Director and Head of Lending at NZ Mortgages ponders the question at the forefront of many minds.

While the media made a splash about the country officially entering a recession, it was nothing new to those in the industry, with many feeling it is somewhere we have been for over six months already.

But it’s not all doom and gloom. On 1 June we saw a major policy change in terms of the LVR restrictions easing which, combined with the price cap for the Kāinga Ora first home grant increasing to $775,000 for new builds and $575,000 for existing properties, meant the real estate market is far from sitting still, especially for first-time buyers. Prior to this easing it was incredibly difficult to get pre-approval to purchase if you had less than 20 per cent deposit. The new LVR restrictions combined with bank lending down 30–40 per cent (the biggest drop in decades) has meant we are now seeing lots of great offers from banks to try and capture business from those who are borrowing.

While stock levels at the upper end of the market are limited, it is a buyer’s market for those looking under $650,000 – which is the current average house price in Christchurch. For those who are in the position to do so, this is a golden opportunity to buy.

Reflecting on the last financial year, 50 per cent of the settlements we assisted with were for first-home buyers. 40 per cent was refinancing – assisting people to consolidate loans to be better with money and 10 per cent commercial/investment. We are already seeing growth in investments this financial year, with the relaxed LVR drawing investors back into the property market – which is a good sign for us all as they have been very quiet over the last 18 months.

With property enquiries up and prices levelling out in terms of interest rates, I believe we are at the bottom of the market and there is only one way for interest rates to go from here – down. Talking to independent and bank economists, it is likely we will see interest rates starting to drop before the end of the year.

With that in mind, our general advice is to fix your mortgage for no more than one year to avoid large break fees in the future. Of course, every borrower’s situation is different, so if your mortgage is up for renewal, or you need to refinance or restructure, we would recommend you get in touch with a mortgage adviser to talk it through. If you have any concerns about making your mortgage repayments, do seek the advice of an experienced mortgage adviser as soon as possible. This is definitely a situation where it’s better to be proactive.

Years of experience mean Nathan Miglani knows how to give you the best possible chance of success if you are thinking of buying or building a property. Whether it’s a first home, next home, rental or a development, Nathan and his team are passionate about helping you through the process and they’ll find the best deal for your unique circumstances. nzmortgages.co.nz