Twenty per cent deposits and clean credit history among the challenges faced by would-be buyers
More first-home buyers are expressing interest in purchasing but are facing harsh scrutiny from banks, according to a recent survey by mortgages.co.nz and Tony Alexander Mortgage Advisers.
Read more: Property listings down 50%
The survey found that for the first time since August 2021, more mortgage advisers have reported increased enquiries from first-home buyers than decreases, with a net positive 8% – the strongest result since February 2021, right before LVR lending restrictions were reintroduced by the Reserve Bank.
The survey noted that while “buyers are concerned about high-interest rates, access to finance, and prices falling after buying, it appears first-home buyers may be focussing on the thing most important to them – that is, securing a house to live in and raise a family rather than trying to get the last 5% or so of price declines in the housing market,” Newshub reported.
Surveyed mortgage advisers said that while a “trickle” of buyers can access less than 20% loans, banks are “cherry picking the highest income earners.” And despite increased interest in purchasing, potential buyers are still facing tough challenges to access home loans, including 20% deposits, clean credit history, and the ability to service their mortgages as interest rates rise.
The survey also revealed that while there were fewer investors in the market, they too are starting to consider the implications a possible change in government next year would bring.
Read next: A top adviser's insights into property investing
The survey found that “a net 33% of mortgage advisers this month have reported that they are seeing fewer investors coming forward for mortgage advice,” Newshub reported. “The result strongly suggests a lack of investors in the market. However, the result is the least weak since July last year and is moving in the same direction as that above for first-home buyers. It is likely that some investors are starting to think about the implications of National winning next year’s general election and restoring the ability of investors to deduct interest expenses from gross income. Borrowing costs have also eased slightly and prices have fallen 10% – 15% in many parts of the country.”
