At the beginning of 2012 the Banks were still pretty tight in terms of lending criteria and property types. All changed with most now lending to 95% and on apartments too. The figure to watch is the LMI fee (Lenders Mortgage Insurance) as at this level it varies considerably. Kiwibank, BNZ and Westpac are at the dearer end whilst ASB have the lowest.
The final quarter has been manic in terms of volumes, this has affected service standards as most Banks struggle to keep up with demand. A lot of this is self inflicted as they all fight over each other in a ‘rate war’ looking for market share.
Several cases stand out this year…
- A $ million first home buyer with a 95% mortgage? Settled last week after three Banks made offers and the difference in Bank fees was nearly $25,000!
- An 80% purchase for a recently discharged Bankrupt, with a Bank too at sensible rates.
- A Mortgagee Sale stopped and the property bought back by the family, at well under the debt level.
- Newly arrived migrants on work permits only, 85% with no LMI fee.
- Self employed couple with only 12 months history, 70% LVR at under 6%
- First home buyer bought an investment property with only 5% deposit
The Auckland property market is on fire fuelled by low rate loans, easing of criteria and shortage of listings. Other factors are Chinese buyers both for owner occupied and investment purposes plus domestic demand partly fuelled by ever higher rents.
We at iLender wish everyone a Merry Christmas (assuming we survive the Mayan prophecy!) and a prosperous New Year. Rates will certainly remain ‘on hold’ throughout 2013 and we’ll see some new lending sources and products too.
Jeff Royle CEO iLender 0800 LENDER