2009 will probably go down as one of the most difficult years in Mortgage and Property terms. Many Brokers shut shop and Lenders made things very difficult for those with small deposits and the self employed. Mortgagee sales reached record highs but the year ended with property prices in many areas at 2007 levels.
2010 will bring a lot of change not only in the Mortgage world but also in the Real Estate world, more on that in a while.
From a Lending perspective the market has tightened further but this week two Banks have re-entered the 90% market so the choice is getting better and so criteria should ease – it needs to! Lo Doc continues to be difficult which restricts many Self Employed people from buying. We have seen many clients this year with good deposits, great track records but because the Accountant does what he is paid to do, the Financials don’t reflect the true income so the Banks say ‘no’. This will ease in early 2010 with not only the Banks looking at high deposit Lo Doc business but a couple of Specialist Lenders poised to return to the market. This is good news all round. Entries at Baycorp (now Veda Advantage) also reached record highs and Mortgages for those with adverse entries can be done, at about double the interest rate charged by the Bank in the initial years. This again should change next year as more Lenders are due to re-enter the New Zealand market.
Regulation of the Mortgage Industry takes effect in October/November 2010 following Europe and Australia. Many think this will reduce further the number of Brokers but increase the level of protection for the Borrower. I for one welcome this, as a Mortgage is probably the most important financial decision we will make and it is important that the advice given is correct. This includes mortgage finance, investments and insurance.
One of the biggest changes in years in the Real Estate business took effect in November with the new REAA regulations coming into effect but there is more to come.