Official Cash Rate expected to stay below 2% until next year
The value of residential property across New Zealand continues to grow beyond $1trn despite a recent slowdown, according to the latest figures from property analytics firm CoreLogic.
It’s no surprise then that the firm has also observed strong competition for mortgages – especially among retail banks – as interest rates dipped during the first half of December.
CoreLogic expects the Official Cash Rate to stay below 2.00% until the end of 2019, “which is good news for new borrowers and those coming off fixed rates.”
At the start of 2018, a minor update by the Reserve Bank to the loan-to-value ratio (LVR) restrictions took effect, which loosened the deposit requirement for investors (from 40% to 35%) and increased the share of high LVR (above 80% LVR) lending to owner occupiers (from 10% to 15%).
According to CoreLogic, the move is expected to have minimal impact on the market – but it will contribute to a small lift in demand from those who were previously unable to satisfy the LVR requirements.
At the end of November, the firm saw an increase in multiple property owners’ share of sales to 38%, however the mix between mortgaged (23%) and not mortgaged (15%) owners has changed further. This is a significant difference from 28% mortgaged and 11% not mortgaged during the third quarter of 2016.
“It’s important to note that this increase in the share of non-mortgaged buyers is not due to them flooding the market, rather they’re unaffected by the same market forces as those buyers requiring a mortgage (LVR restrictions, interest rates for example) and so haven’t reduced to the same degree as them,” said CoreLogic.
Related stories:
Reserve Bank announces new governor
Personal debt high for Kiwis
It’s no surprise then that the firm has also observed strong competition for mortgages – especially among retail banks – as interest rates dipped during the first half of December.
CoreLogic expects the Official Cash Rate to stay below 2.00% until the end of 2019, “which is good news for new borrowers and those coming off fixed rates.”
At the start of 2018, a minor update by the Reserve Bank to the loan-to-value ratio (LVR) restrictions took effect, which loosened the deposit requirement for investors (from 40% to 35%) and increased the share of high LVR (above 80% LVR) lending to owner occupiers (from 10% to 15%).
According to CoreLogic, the move is expected to have minimal impact on the market – but it will contribute to a small lift in demand from those who were previously unable to satisfy the LVR requirements.
At the end of November, the firm saw an increase in multiple property owners’ share of sales to 38%, however the mix between mortgaged (23%) and not mortgaged (15%) owners has changed further. This is a significant difference from 28% mortgaged and 11% not mortgaged during the third quarter of 2016.
“It’s important to note that this increase in the share of non-mortgaged buyers is not due to them flooding the market, rather they’re unaffected by the same market forces as those buyers requiring a mortgage (LVR restrictions, interest rates for example) and so haven’t reduced to the same degree as them,” said CoreLogic.
Related stories:
Reserve Bank announces new governor
Personal debt high for Kiwis
