A net 56% of mortgage professionals see fewer investors seeking mortgage advice, according to September First Mortgage Trust and Tony Alexander survey data.
Thursday, September 23, 2021, 10:28 a.m.
That’s a weak result, says Alexander, an independent economist.
However, it is in line with the situation from March to June of this year.
Alexander says this represents part of the improvement in July, which itself was noticeably reversed in August. Most of the responses to the survey arrived before the country was confined.
“The result is consistent with other surveys showing investor demand was dampened by the LVR and tax changes announced in February and March of this year.”
Impact of apparent containment
Banks remain as willing to lend on average this month as they were last month, but customers’ spending and revenue streams are much more closely watched than ever before.
Low deposit loans are harder to get, and banks are increasingly wary of funding some people who want to buy out the plan as costs rise.
The foreclosure had an impact on the level of investigation of investors and first-time home buyers.
The delay in the interest rate hike may have contributed to a slight shift in the fixed-term preference to two years instead of three years.
But these remain the most favorable terms to set, and there is now as much interest in fixing one year as fixing five years – hardly any for either term.
Why this confinement is different
This lockdown is viewed in different terms from the other two significant events, Alexander says.
“Why? Probably because of the overwhelming evidence that when the closures end, the housing market rises again.
“The government has postponed the new responsible loans and other stricter credit assessment criteria until December 1 from October 1, given the ability of those involved to prepare.”
He says, however, that banks’ willingness to advance funding is still weaker in September than in any other month since December of last year, except August.
âPerhaps the important point is that there hasn’t been another sudden tightening in the will of lenders in the last month.
âExperience from previous lockdowns has shown that while particular sectors such as hospitality – and construction this time – are heavily affected by lockdowns, the economy and the housing market are now known to rebound strongly when freedom come back. “
In all of the surveys last year, the overwhelming majority of mortgage brokers said their clients were most in favor of setting their one-year mortgage rate.
Alexander says this has been the best strategy since the end of 2008 in New Zealand.
This year things have changed dramatically. While in January 89% of advisers said the one-year term was the most requested, it fell to 39% in April, 5% in July and now just 3%.
The proportion preferring the two-year term increased sharply from December to June, but has generally stabilized since then.
The term that is becoming the most popular is three years. More than 55% of advisers say people prefer three years, down slightly from 69% last month.
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