The current crop of discounted rates and ‘cashback/tablet’ promotions has nothing to do with the International markets and all to do with the local Banks slugging it out for market share. It can’t go on so if you looking for a good short term fix then now is a pretty good time to do it. Floating is expected to remain the same for another year and will rise gradually after that. Make sure you don’t need it in a hurry though, Banks are taking a while to process applications because of volume.
Also of note is the change in criteria with many Banks, particularly in the high LVR and Apartment arena. We recently secured a 95% loan a customer buying for the first time at $1 million! Beware fees at this level of borrowing particularly with any Bank that outsources it’s LMI (Lender Mortgage Insurance). Kiwibank for example are up to 3 times more expensive than ASB.
Apartment and townhouses have been difficult to finance at over 80%. No longer as with so much money to lend the Banks have relaxed the rules making high LVR loans available across the board, including Lifestyle blocks.
Why so much money? Simply put the Banks are enjoying a huge amount of Kiwi money coming into the savings accounts and so have much more to lend out, without relying on imported money. Kiwi’s are reducing debt and putting spare cash onto deposit in unprecedented amounts.
The Auckland property market is on fire with far more buyers than sellers. This has created an opportunity for Agents to convince Sellers to sell via Auction. This can be really bad news for Buyers as to bid at Auction you need to have everything in place before bidding. This can be an expensive process as Banks not only approve you and I as borrowers, they also have to approve the property. We recently had a situation where the borrower only needed 70% but because the Bank thought the customer had paid too much, they insisted on a Registered Valuation, this after the contract was unconditional as Auction contracts tend to be. In our view Auctions exclude 80% of potential buyers, condition the Seller and advantage the Agent. I’d love to hear any opposing views.
We also have a new player in town. Resimac of Australia launched yesterday and their signature product is a Lo Doc mortgage for the Self Employed. Up to 70% LVR and at 5.95% it is sure to sell well.
We have a new number 0800 LENDER (536337), expect to see it on TradeMe very soon.