Record low mortgage rates are leading to more affordability

by Krizzel Canlas24 Apr 2019

Auckland is on the cusp of once again being considered affordable for typical first home buyers, according to interest.co.nz’s latest Home Loan Affordability report.

The report shows the average of the two year fixed mortgage rates offered by the major banks in March was 4.02%, the lowest since January 2002. The peak during that period was 9.64% in March 2008. It suggests combined lower interest rates and higher take home pay means the amount of their weekly income a typical first home buying couple would need to set aside for the mortgage payments on a lower quartile-priced home dropped by 13% year-on-year to 40.07% in March, with payments of 40% or less considered affordable.

Mortgage payments on lower quartile-priced homes would take up less than 40% of the take home pay of typical first home buyers in Waitakere (38.08%), Manukau (38.21%), Papakura (34.76%) and Franklin (34.26%).

Read more: Mortgage rate war: ANZ latest to join new round of cuts

However, the report noted typical first home buyers might still struggle to get into their own home on the North Shore, where the mortgage payments would eat up 48.57% of their take home pay, and in Rodney (41.06%) and Auckland Central (also 41.06%).

Across the country, lower quartile dwelling prices remain well within affordable limits everywhere except Queenstown – the second least affordable place in the country for first home buyers after Auckland’s North Shore.

The report revealed Southland as the most affordable region in the country, where the mortgage payments on a lower quartile-priced home would be $198.74 a week. It would take up just 12.42% of a typical first home buying couple’s take home pay.

 

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