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Mortgage Talk

Mortgage Calculator - Image courtesy of Stuart Miles at FreeDigitalPhotos.netHouse purchases have been trickling along over the last few months, with no apparent slow on the market felt from the Reserve Bank’s imposed restrictions on lending. REINZ data show a 2.1 percent increase on October 2012, and an increase of 0.9 percent compared to September 2013.

Housing market indicators provided by the REINZ (October 2013) show house prices are up by 7.2 percent annually, Auckland up by 9.7 percent and the Central Otago Lakes a staggering 19.5 percent.

The new rules restrict to 10 percent the total value of a bank’s lending to borrowers who have less than a 20 percent deposit, and was expected to hit first home buyers the hardest. While it is too early to tell how much of an effect these new restrictions will bring, we forecast that towards the end of the first quarter of 2014 this may change and the market will adjust accordingly.

Interest rates also continue to sit at an affordable percentage, from 4.95 percent on a six month term right through to around 7.10 percent for a five year term. We anticipate that the one and two year rates will start to rise early next year, with banks now pricing a 2 percent lift in floating rates over the next two years.

Auckland’s Proposed Unitary Plan continues to be a hot debated topic. The demand for housing is high, the current supply constrained. The Unitary Plan aims to increase the supply of land and housing choice, creating a more compact city (think high-rise apartments) and smaller housing sites (think terraced houses in the opening credits to Coronation Street). These are affordable options, yes, but don’t expect a glut on the housing market in the immediate future. It’s important to get this Plan right, and there will be delays from objections and some years before it will be operative.

We recommend the following websites for further reading:



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