News of lower wholesale interest rates suggests we may be in for another round of super low home loan interest rates as early as next week. A news item on interest.co.nz provides examples of the correlation between swap rates and the mortgage rates with one example being SBS Bank’s one year rate as it was back in November 2015.
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Record levels of home loans were approved in December 2015. For two weeks in a row more than $1.5 Billion of new lending was approved. In the seven days till 11 December 2015 $1.56 Billion was approved making it the highest value of home loans approved in a week since records began.
However a week later $1.59 Billion was approved making it the new record.
The time is right to fix loans to get the best interest rates on offer says an expert in the latest article on NZHerald. On PropertyTalk property investors say irrespective of market changes they use both fixed and floating loans across their portfolio to spread the risk.
Property asking prices in the provinces grew by a higher percentage than properties in Auckland. According to Trade Me Sales Price Index for October 2015 asking prices in Auckland increased by 2 percent compared to 3.8 percent in the provinces.
There as been no change in the OCR however another cut is expected in 2015 and there maybe a further cut in 2016. Future movement in the OCR is said to be linked to the value of the NZ Dollar and right now the NZD is too high to maintain inflation at the target rate of 2%. A lower OCR will provide some upside for home owners with lower interest rates.
The bright-line rule and LVR restrictions come in this week, but don’t expect any major change in investor behaviour. Investors who have been actively buying rental properties over the last few months have already changed their behaviour so they can continue investing in property.
Homebuyers are getting a look in now property values have dropped in the Auckland region however shoring up the right loan is no easy task. It’s a minefield out there for home owners who need the right loan structure to benefit from the lower property values. Negotiating the ins and outs of a property mortgage takes time …
Higher loan rates for property investors is now a reality in Australia. A couple of banks (ANZ, CBA) have recently raised their home loan rates for investors. The residential property market is also hot in the UK – so it’s not just an Auckland thing. A garage sold for $2m in London recently and the median house price in Sydney is now over $1m. Foreign Buyers are investing in residential property in Sydney, London and Auckland.
Odds are on for a substantial drop in the OCR rate over the coming months and banks are suggesting it could get as low as 2.5% by October.
Floating rates are likely to follow suit which is good news for borrowers who haven’t fixed their loans. It’s bad news for depositors however and anyone relying on the interest income.
Major Banks may reduce the deposit required for buying an Apartment. Currently a twenty percent deposit is required and this could drop back to fifteen percent. The focus of the move is on home ownership not investment and it should attract more first home buyers into the property market.
Competition is rife amongst New Zealand home loan lenders. The promise of yet even lower interest rates in the near future is enticing the most resolute mortgage lendee to consider breaking their existing fixed rate term.
It’s no secret RBNZ is looking for suitable measures that target property investors to help cool the Auckland property market. Back in February 2015 property investors awaited news of a measure that would target investors with 5+ rental properties but the announcement did come.