My latest video providing a mortgage and interest rate update for those first home buyers, property investors and home owners.
Please enjoy, and feel free to ask me anything – client or not – I’ll help you out!
I’d love to talk to you about your finance and mortgage needs!
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Michael Anastasiadis | Mortgage Broker Wellington
Full Transcript of Video:
Good afternoon, everybody. It’s Michael Anastasiadis here from Bozinoff Mortgages, mortgage advisor, mortgages made easy, coming to you live here on a beautiful afternoon here in Wellington.
So I just thought I’d quickly jump online and just give a quick update on what’s happening with mortgage rates and the world of mortgages.
You would have seen, if you follow me on social media, that I put in some graphs earlier today of the new median house price in New Zealand is now 850,000. So that’s a record for New Zealand.
Another record was that we’re 30% down in listings, as what we were this time last year. So they are year to year figures. So it’s really tough going out there for first home buyers at the moment. The lack of listings is making it really hard. And it’s keeping those prices up.
Also for those investors that are looking to buy investment properties, look, there’s just hardly investment properties out there. There’s just hardly any properties out in the market. And that’s been a trend that we’ve been seeing well before lockdowns.
So it’s going to be interesting to see what happens in spring.
The real estate agents that I’ve been speaking to and dealing with are saying to me that they do have stock coming on. So it looks like it’s going to be a busy spring and summer. It’ll probably go by real quick from here to Christmas now, as those new listings come on, and as we go down in the alert levels, and as people get vaccinated.
We’ve seen what happens when we open up again, we go crazy for property. The love affair doesn’t end there.
I’ve been doing mortgage applications. The inquiries are still coming in, it’s not going away, not only from first home buyers, but from investors as well. So those inquiries are just keeping up.
People know that property is still one of the best asset classes you can invest in. And look, if you’re looking to buy your first home, what I do know is, no matter what’s going on externally, what’s going on with interest rates, you just want to buy your own home if you can. Why pay rent when you can pay a mortgage?
And that’s just not going away. It doesn’t matter who you are, if you’re renting, you’d rather be putting that rent towards your own mortgage than in the pocket of the landlord.
So in terms of interest rates, all the data that I’m reading from the banks is that they’re expecting every time their reserve bank meets from now on, they’re calling that it could be live for interest rates to go up.
To be fair, the banks have already put up interest rates, so the reserve bank will be playing catch up. But interest rates are on the rise.
So if you are looking to fix, or you’ve got a mortgage coming up for renewal within the next 60 days, now would be the time that I’d be getting on the phone, speaking to your mortgage advisor, your mortgage broker, your financial advisor, your bank, whoever you’re dealing with, now would be the time to chat with them.
That doesn’t have to be me. There’s plenty of good mortgage advisors, good mortgage brokers out there. So get in touch, deal with who you’re talking to, and get that locked in right away, because rates are going to be going up from here for the next while. And look, we’ve seen that this lockdown isn’t going to spook the reserve bank or banks from putting up interest rates. So things are going to get back to normal pretty quickly, guys.
In terms of what I’m seeing out there, one thing I am noticing is, for new builds, it’s getting harder and harder to find them and that’s because there’s just not enough land, especially here in Wellington, right?
There’s just no land for a lot of new developments to happen. What was happening up a Newlands, Grenada, Aotea, Whitby, we’ve come to the end of those stages.
There’s not many plots left, there’s not many vacant sections left. So what we are seeing is, I have seen some in Wainui, but they’re not due to completion until late 2023. So that’s way too long for banks to give any sort of preapproval or approval on those, just too much can happen between now and then. So it’s hard to get those across the line with the banks right now.
So it is records. Wherever you look at it, it’s records in the property world. Interest rates were record lows, now they’re going to go up. House prices are record highs. I don’t see that keep going to go up, I do see it plateauing, but I’m not going to see them drop, guys, they’re not just going to drop, not with the amount of demand that’s out there and the lack of supply.
And the other thing is, record listings are at the worst that it’s ever been, I think it’s the second worst ever since records began.
Hi, everyone watching, by the way. Thank you for your likes.
Thank you for your support. Do me a favor, press that like button, press that share button, because the social media algorithms like it when you do that, and you’re actually doing me a favor as well, plus it’s good to put content out there that other people can see in our networks, right?
Because everyone’s got an interest in property, either people that are looking to buy, people that are wanting to buy investment properties, people that are renting, or people that already own their own house, they want to know what’s going on. So it’s important that we share content like this.
So I hope to be at some open homes this weekend. The real estate agents told me, those that had open homes in the weekend, were saying that they were doing them socially distanced, but they were getting good numbers through, anywhere from 20 to 30 groups through.
And there’s a whole lot more coming on, right? I know that some people have been decluttering, photos have been taken, so there’ll be more listings coming on in the coming weeks. I’m expecting the rest of September to be just the pickup. And I’m picking October is going to be one of the busiest amounts for listings coming on.
So if you’ve been thinking about buying a property, now is definitely the time to get your preapproval. If you’ve been thinking of selling, now is definitely the time to be selling as well and speaking with your real estate agent. So that’s going to be really big here.
Question coming through. “Do you think the issue is the deposit or the repayment with the housing problem?” I think if you’re talking from a deposit point of view, we are expecting the reserve bank to impose new rules on the banks, which will mean that they can only allow customers with less than a 20% deposit.
They’re going to put a cap on that, that will mean that no more of their banking loans can be to people without a 20% deposit. The current rules are now that they can lend out 20% of their loans, we’re expecting it to be 10% of the bank’s loan book, to people without a 20% deposit. So it’s going to become harder.
And what we saw last time this happened, the banks cherry-pick the best of the applications to allocate their funding to people under a 20% deposit.
The other problem is, why I think house prices are going to plateau, is people cannot service the new repayments. Because if I look at Wellington, the average house price now is about, call it 1,050,000 to buy the average house. So a 20% deposit of that is just over 200,000, 205,000 for a deposit, meaning you need to get the other 800,000 from the bank.
If both working applicants are not on 100,000 each, and look, this is generic here, it’s not specific advice, it’s going to be hard to get a mortgage of 800,000. I’ll be honest right now, you’ve got to be close to that $80-90,000 each income mark to make a mortgage of $800,000 work.
So that’s why I think prices are going to plateau, that’s why it’s going to become harder for real estate agents, because there’ll be more people that will be putting in offers with conditions.
So don’t expect a frenzy like it was last year, where everyone was having to put in offers, thinking it was like an auction, going in unconditional. That’s not going to be happening this time. A lot of my buyers have got a big fear of overpaying. People are very cautious about paying top dollar for properties.
They don’t want to be overpaying and they are putting in conditions, they are doing their due diligence. Which is great, because some common sense has come back into the market.
There you are, guys, I’m going to sign off. Hopefully that was useful. Like I said, do me a favor, press that like button, press that share button. And I’ll come online again with the live video soon. Take care, everyone. God bless.
Especially those of you in Auckland, we’re thinking of you all. And if you’ve got a property that’s coming up for settlement, now would be the time to be talking to your lawyer about what a settlement looks like in alert level three up in Auckland. They know the drill, they know how it works, and they’ll be able to give you some advice. Ka kite, everyone. God bless. And we’ll be online again soon. Cheers, guys.