Finsure manager says there's "sunshine around the corner" for advisers in a tough market
The Reserve Bank's upcoming (all but confirmed) quarter-point cut to the Official Cash Rate is boosting optimism that New Zealand's property market is finally emerging from its prolonged downturn, with the mortgage industry predicting a more buoyant spring selling season ahead.
Jenny Campbell (pictured), country manager for Finsure New Zealand, said a reduction to 3% is the logical next step. For those with mortgages, the lower rates have been a relief – however, she notes that the market is still tough out there for advisers.
"It's great to see rates coming down, that’s making a real difference to people's wallets on a week-to-week basis,” Campbell told NZ Adviser.
“But it has been a tricky time in the mortgage market, particularly for those who brought a property at the height of the market and have experienced some value loss. There are a lot of people stuck in mortgages that they can't get out of right now, because they just don't have the necessary LVR space to look at refinancing.”
Still, Campbell noted that the economic indicators are generally looking good. While it is a slow recovery, it still “appears to be going in the right direction.”
Back in April, bank economists were predicting house price growth of between 3.79% and 9.4% for 2025. Cotality’s latest house price index (HPI) saw chief property economist Kelvin Davidson saying that it may be looking like a 1-2% rise in 2025 at a push. However, there’s still room for a bit more of a bounce-back, as the market tends to remain subdued over winter.
“There is sunshine around the corner - there always is,” Campbell said. “I think we’re looking at a good spring. I think people have come to terms with the fact that it is a different property market, but there is always an uptick when the weather starts to turn again.
For advisers however, the operational challenges that they’ve seen over the last few years are still lingering. These include struggles with turnaround times and servicing, which means tough conditions all around.
Still, Campbell said that most have come to terms with the fact that we’re in a different property market – far from the red-hot boom of 2020 – and there are real upsides. For first-home buyers, it means one of the most affordable markets that have been seen in recent years.
Cleaning up for the spring
The RBNZ has now cut the OCR six times since August 2024, bringing it down from 5.5% to its current level as inflation has returned to the target range of 1-3%, providing much-needed relief for borrowers who have been under mortgage stress.
Major banks are predicting mortgage rates will continue to fall, with some forecasting the OCR could reach as low as 2.5% by year-end. Campbell noted that while borrowers always want to know where the floor is, the reality is that we just don’t know. That said, now is definitely a good time for advisers to start proactively preparing for a busier spring.
“It is time to start gearing up with communications, particularly with your existing client base,” Campbell said.
“A lot of people are waiting to see what happens before making a move, so it’s a great time to get back in contact with clients so they can be top of mind. I’d be getting everything prepared and ready for the spring uptick.”
