My latest video sharing my mortgage observations with record house prices, loan to value ratio (LVRs) changes and the difficulty getting applications or appointments with the Banks.
Please also note, there is a full transcription of this video, at the bottom of the page, if you’d rather read it.
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Transcript of the video here:
Okay, good afternoon, everybody. It’s Michael Anastasiadis here from Bozinoff Mortgages, mortgage broker, mortgage advisor, mortgages made easy.
Doing a quick little live video here. It’s been a very eventful week in the world of property, and interest rates, and reserve bank announcements, and loan to value ratio rules, and government asking for the reserve bank to take into account the housing market when it comes to decisions with their monetary policy.
But out there in the real world, when people are placing offers this week, it just continues to be record offers coming in this week. One observation I have made is that prices are a sort of holding around at 1.2, 1.1 million mark for a decent, three bedroom, plus property in Wellington. So, it just shows you that prices are still high.
Very frustrating to hear in all the news that nobody’s, actually, talking about the supply side of things, and what we’re really going to do to free up the supply to create more land for more builds.
Because, for me, that’s the answer.
We just need more properties being built, more land. Because, there’s just so much demand across New Zealand. So, that’s what’s keeping the prices high. So, until something happens on the supply side of things, not much is really going to change.
Banks are taking about three weeks to process a new pre-approval. Some banks are getting close to a month now for a pre-approval.
Having to call in personal favors to try and get urgent loan applications looked at, or bumped up. But, again, they are been prioritized with other urgent things. So, the level of inquiries across the country remains unprecedented. So, everyone is looking to buy property at the moment. So, if you’re selling, boy, what a great time to sell. Never been a better time to sell.
But if you’re buying right now, it’s very difficult with all the competition that’s out there.
I am starting to see first-time investors are struggling to make the new loan to value ratios work for them. And also servicing. So, the credit criteria.
Do they have enough income to make all the lending work? So, that’s going to be an interesting observation to see how that plays out over the coming weeks, and months, as more of these pre-approvals under the old criteria expire. And I do think we’ll start to see some investors that’ll naturally drop out. I’m also seeing some first home buyers naturally fall out as well.
They’ve just been with what’s going on. I have picked up a few clients this week, because the banks are too busy to make appointments with them. It’s just impossible for some people to sit down and speak to someone with the bank. So, good for me, but there’s not really much more I can do for a lot of people, because I’m restricted by the criteria. Got to be a New Zealand citizen, permanent resident, or Australian, or Singaporean to buy land.
You’ve got to have a very good credit history with little to no current debt.
You’ve got to have a minimum 10% deposit, still. So 20% deposit is ideal, but some of the banks are still doing 10% deposits. And then, ultimately, you’ve got to have enough income to make the deal work. And, unfortunately, that’s where a lot of the deals are struggling at the moment, because of just the increase in house prices.
So, just some observations, guys, that’s what I’m sharing. For those watching, by the way, please do me a favor, press that like button, press that share button. Because, the more certainty we can put out in the market in these times of uncertainty, the best that is for everyone.
You would have seen it as well, there’s talk of interest rates rising. And that’s natural, because we’re sort of at the low point. Interest rates can’t really go much lower than what they are now, 2.29.
There had been talk of a negative OCR, negative cash rate.
And maybe interest rates having a one in front of it. But the economy doing so well at the moment, that’s not going to happen. We don’t see that happening.
Rates could drop a little bit further, but going into the 1%, not the way house prices are going at the moment. I don’t see that happening. Longer term, all the commentary I’m reading is to start to expect interest rates to start going up from late 2022, early 2023. So, a lot of people are still fixing for one year. And banking that in a year’s time rates will be the same, and we can start looking at how to structure, and split the lending going forward.
So, yeah. Banks are looking after their own clients.
So, if you’re new to bank client, it is tough. Because, the banks are just looking after their own clients at the moment. You have to be a pretty good deal for another bank to look at you. Because, that’s a bit of a myth with people thinking that mortgage brokers send the applications everywhere. We’ve got to meet criteria as well. And we can’t be sending the application everywhere, damaging your credit rating with everyone looking into it. So, we’ve got to be realistic with what we’re doing as well.
So, yeah. Hard for non-bank clients, hard for investors at the moment. Investors aren’t the flavor of the month. And it’s just difficult times out there, guys. And that’s what happens when there’s a lack of supply out there, prices go up, and it’s a frenzy out there.
Everyone’s doing what they need to do to be able to secure a property. So, yeah. I thought I’d share my observations, hopefully, that was useful. Do me a favor? Press that like button, like I said. And any questions, put them in the comments below. If you know of anyone that would find this useful, feel free to tag them, as well, in the comments below. I’m going to sign off. Have a great afternoon, and weekend, everybody. And may God keep blessing our beautiful country. Cheers, guys.