Banks ease lending rules as one-year fixes surge
First-home buyers remain a key force in New Zealand’s housing market, according to the September mortgages.co.nz & Tony Alexander Mortgage Advisers Survey.
A net 19% of advisers reported seeing more young buyers seeking mortgage advice.
Although down from a peak of 52% at the start of the year, this result is still above the five-year average of 16%. Alexander (pictured) noted this shows that while no flood of fresh buyers has emerged in response to recent rate cuts, many are still active in the market.
Advisers said lower test rates are making it easier for servicing, with some lenders even offering special rates of 3.99%. However, strict LVR rules remain in place, and processing delays continue to frustrate buyers.
Investors face DTI constraints
Investor activity remains subdued, with a net 2% of advisers reporting an increase in demand. While falling interest rates are attracting interest, new debt-to-income (DTI) rules and declining equity are curbing borrowing capacity.
Advisers noted that banks are increasingly offering 10-year interest-only loans, but DTIs are starting to weigh more heavily.
“Investors are on the hunt for bargains – banks very willing to approve and advance funds easily,” one adviser said.
Banks more willing to lend
A net 31% of mortgage advisers reported that banks are more willing to advance funds, well above the five-year average of 7% and the strongest result since March.
Alexander said this is one of several indicators suggesting economic and housing market conditions may be firming after a weak first half of the year.
This aligns with supply shifts in major centres. Cotality’s September NZ Property Pulse shows housing stock in Auckland and Wellington is now growing faster than population, easing occupancy rates and keeping prices in check. Chief property economist Kelvin Davidson said this reflects a correction of past shortages, not oversupply.
One-year fixed term surges in popularity
Borrowers are strongly favouring short-term fixes, with 79% of advisers saying clients now prefer one-year terms. This is up from 42% last month and just 33% two months ago.
One- and two-year rates are averaging near 4.75%, compared with around 4.95% for three-year terms. Alexander noted that “in New Zealand, borrowers chase the lowest rates. They don’t back an interest rate view.”
Refinancing enquiries steady
A net 27% of advisers reported more refinancing enquiries, broadly unchanged from August’s 33% and above the five-year average of 20%.
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