Mortgage Rates & Advice

For most of us our mortgage will be the biggest loan we will ever take out. Very few can afford to buy a home with cash so a mortgage is an inevitability for those of us who choose to venture into home ownership. Browse Mortgage rates here before you go and speak to a bank or Mortgage Broker to work out the best deal that will work with your lifestyle and investment approach.


Latest Bank Home Loan Rates
Bank Floating 6 Month 1 Year 2 Year 3 Year 4 Year 5 Year
ANZ 5.69 4.99 4.39 4.35 4.55 4.85 4.95
ASB Bank 5.70 5.25 4.45 4.39 4.55 4.85 4.95
BNZ - Std, FlyBuys 5.80 4.99 4.69 4.59 4.79 5.19 5.39
Kiwibank 5.80 5.74 4.60 4.60 4.84 5.04 5.14
SBS Bank 5.79 5.25 4.85 5.05 5.49 5.89 6.09
TSB Bank 5.69 5.35 4.45 4.49 4.55 4.95 5.05
Westpac 5.79 4.99 4.69 4.79 5.19 5.29 5.49

 Applying For a Mortgage

Some people can afford to buy a house outright. However, for many some form of finance, normally in the form of a mortgage, is needed. It is important to fully understand what type of mortgage you will need before committing.

Mortgages come in various packages, the main three being:

  • Fixed - a fixed home loan is where you lock in a set interest rate for a certain period of time so that your repayments are set to a fixed amount
  • Floating - a floating or variable home loan means that your repayments follow where the market goes.  If the interest rates go up, your repayments will follow and the same if the interest rates go down
  • A combination of fixed and floating - balance the risk with a combination of both

Each home loan will have different terms, including how long the home loan is for, and your loan amount will depend on your deposit. The amount needed for a deposit will depend on the type of property you buy and the relative terms set by the bank.

Before you commit to an offer or to buying a property, you can get a pre-approval from the bank. By deciphering your financial situation they will tell you whether they will guarantee you finance, and the maximum amount they will guarantee. This will help to establish your maximum price point when searching for a property.

An easy way to establish this informally before you start house hunting, is by checking out a mortgage calculator, available here, on any of the major banking websites or Sorted.

 

 


Latest News & Articles

Despite Easter/ANZAC being close together and many people taking an extended holiday (rather than visiting the bank), mortgage lending activity was solid in April. Even so, the banks in aggregate are still operating well below the LVR speed limits, and interest-only lending to investors is contained too. Over the next few months, there has to be a decent chance that the scrapping of the capital gains tax proposals and the cut in the official cash rate will provide a further boost to activity in the mortgage market.
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
The latest figures from the Reserve Bank (RBNZ) showed that mortgage lending in April was $5.45bn, up by about $80m from the figure of $5.38m a year ago. As the first chart shows, lending to owner-occupiers rebounded a bit in April (after a soft March), but investor lending continues to edge down on a year-on-year basis. As part of the rise in owner-occupier lending, high loan to value ratio (LVR) lending to first home buyers (FHBs) continues to grow, albeit there’s been an inevitable slowdown from the previously very rapid rates (see the second chart).
 
Annual Change in Lending, $m (Source: RBNZ)
 
 
Once again, the number of loans approved across all borrowers was relatively flat, so the growth in lending in April was driven by larger average loan sizes. Meanwhile, the LVR speed limits are still not being tested by the banks (at least in aggregate). The proportion of lending to owner-occupiers in April with an LVR >80% was only 12.6%, well below the 20% cap (see the third chart). Note that it’ll be July before we get the first figures on investor lending at the new, lower 30% deposit requirement (still a 5% speed limit).
 
Annual Change in Lending, % (Source: RBNZ)
 
 
In terms of interest-only lending, activity here remains contained, especially for investors (see the fourth chart). As we suggested in a Pulse last week , it’s not only that new interest-only loans have become harder to secure, but also that banks are more reluctant to roll over existing loans, often preferring a switch to a normal repayment mortgage.
 
So where might things go next? It was probably a bit too soon to have expected the scrapping of the capital gains tax proposals on April 17th to have had much of an effect on the lending figures for last month, but this may well provide a bit of momentum to investor lending and the overall mortgage market in May (data to be released on 27th June). In addition, we’ve had the cut in the official cash rate on May 8th, some of which has been passed through to mortgage rates. Hence, this is likely to also boost borrowing activity to some degree – albeit people still obviously have to raise the deposit, satisfy the income/expense tests, and that they are able to afford to pay at a theoretical mortgage rate of 7-8%.
 
Proportion of lending at high LVRs (Source: RBNZ)
 
To finish off, it’s also worth noting that the final decision from the RBNZ about extra capital requirements for the banks is now expected by the end of November this year and any new rules would start to be phased in from April next year. Interestingly, the RBNZ feels that it has already made a good start on bolstering financial stability, via the LVR rules – see their research here 
 
Interest-only lending flows as % of total (Source: RBNZ)
 
The research also acknowledges that the LVRs did have adverse effects at various times (e.g. disproportionately limiting activity from first home buyers in the early days), but it rightly points out that these were recognised and the rules adjusted accordingly. This week’s Financial Stability Report (Wednesday 9am) may well provide further insight into the RBNZ’s future plans for the LVRs.
 
 
 
 
 
 

 

 
 
Plenty to talk about this month, with the key influencers Government and RBNZ making a few big calls. Wondering about the Capital Gains Tax, Official Cash Rate and Foreign Buyer Ban? We look at the market impact of all. 
 
We also discuss some startling figures on property values in some Auckland suburbs dropping by as much as 30% – spoiler alert – they’re not! Looking ahead we’re anticipating sales volumes to recover a little by the end of the year.
 
 

 

Although it’s not law yet, the tax ring-fence for rental property losses is likely to be approved and, when that happens, will apply to the current tax year (which has of course already started). But there are reasons to doubt that it will dramatically change the rental property landscape. Most notably, it’s only a ring-fence – property losses will no longer be able to offset non-property income, but they can be used to lower tax within a property portfolio. Some investors will undoubtedly be hit quite hard by this. However, other equity-rich landlords may just snap up any sold properties, therefore limiting any adverse effects on the stock of available rentals.
 
This is an adaptation of an article originally written in April for the Auckland Property Investors’ Association: https://www.apia.org.nz/
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
The proposed tax ring-fence for rental property losses isn’t in force yet, but it is currently going through the ‘bill to law’ process - which starts with a select committee and then ends up before Parliament for the final stage. It would appear though that this is a mere formality and that when it becomes law the ring-fence will effectively be imposed for the current tax year starting 1st April 2019. In other words, investors need to be accounting for the ring-fence now – i.e. running their sums on the basis that a rental loss can no longer be used to reduce the tax bill on non-property income(s).
 
Mortgaged multiple property owners’ % share of purchases (Source: CoreLogic)
 
Certainly, some investors (especially those new to the game and/or with a big mortgage and hence greater likelihood of a loss) will be hit quite hard by this rule. But on the whole, we’re doubtful that the ring-fence will dramatically affect investor confidence or significantly reduce the stock of property in the rental sector.
 
First, because of the loan to value ratio (LVR) restrictions, investors have required a deposit of at least 30% for several years now and, on average, will be less likely to be making operating losses than in the past – hence, less likely to actually be utilising the tax advantage. Sure, many will still be using it. But it’ll be less common than in the absence of the LVR rules. Second, and perhaps most importantly, it’s a ring-fence, not complete removal. Investors will still be able to use losses to reduce their tax bill, just only within a property portfolio, not against non-property income.
 
National median hold period in years  
(Source: CoreLogic)
 
It’s also reassuring to look back at investor behavior when the depreciation allowance was removed in April 2011. This was also a significant change in the rules around property investment, yet our Buyer Classification figures show that the upward trend in the share of purchases going to mortgaged investors barely paused for breath (see the first chart). To be fair, property price rises more generally were starting to kick into gear again around that time (see the second chart), and these gains may have swamped the effect of removing the depreciation allowance. And clearly, that factor isn’t as strong now, with values flat or slightly falling in Auckland and Christchurch for example, and slowing in many other parts of the country.
 
All that said, another factor to keep in mind here is the tighter availability of new interest-only loans in the past few years, as well as the reduced ability for investors to roll over existing interest-only lending. Given that interest-only loans (and hence lower mortgage payments) are an important tool for negatively geared landlords, it’s conceivable that some will have already looked at their sums (regardless of the ring-fence proposal) and decided to sell properties that don’t stack up anymore. This may have affected rental supply in some areas and would be another factor helping to explain the gradual slowdown we’re seeing in property values around the country.
 
National median hold period in years
(Source: CoreLogic)
 
 
Of course, this would only serve to lessen the potential effect when the new law does actually come into force. Moreover, let’s not forget that just because a landlord sells their property, it doesn’t necessarily vanish from the rental stock – it may well be snapped up by another investor, perhaps with more equity behind them. In addition, rather than selling, landlords may just hold their properties for longer than they planned in order to compensate for the effect of the ring-fence on their expected return. That would just reinforce what we’ve already started to see in the past year or two – that is, investors holding for longer than in the past, and also relative to other buyer groups, such as first home buyers (see the third chart).
 
Bottom line, we doubt that the looming tax ring-fence for rental property losses on its own will drive a sea-change in investor behaviour.
 
 
 

 

 
Multiple property owners with a mortgage accounted for 25% of property purchases in April, continuing their gradual return from a lull in late 2017 and early 2018. Given timing issues, this cannot have been a bounce-back from capital gains tax-related uncertainty; rather a sign that investors still have faith in the prospects for the property market. First home buyers are also holding their ground in terms of market share, especially in the main centres.
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
CoreLogic’s Buyer Classification figures for April showed a strong return to the market by mortgaged multiple property owners (MPOs) – in other words, investors - with first home buyers (FHBs) also managing to hold their ground last month.
 
As the first chart shows, mortgaged investors/MPOs increased their share of property purchases nationally from 24% in Q1 as a whole to 25% in April, a level that hasn’t been seen since late 2016 (when investors’ market share was already in decline in the wake of LVR III’s 40% deposit requirement). As an example, Christchurch saw a particularly strong jump in mortgaged investor activity in April (see the second chart).
 
NZ % share of purchases (Source: CoreLogic)
 
Of course, we shouldn’t get carried away by a single month of results on its own. However, it’s still worth paying attention to, and suggests that many investors remain confident about the returns they can generate from property, even despite extra costs such as higher insulation standards and the tax ring-fence for losses. Note that April’s figure is not a response to the scrapping of capital gains tax (CGT) either – CGT was abandoned on 17th April, and given the time it takes to settle a property purchase, these figures can’t have been affected to any great degree.
 
Christchurch % share of purchase (Source: CoreLogic)
 
FHBs held their ground too, as they continue to tap KiwiSaver for at least part of their deposit and/or compromise on the property itself (either location or type), hence allowing access to cheaper segments. The Welcome Home Loan scheme will also be successfully assisting some FHBs - about 8% in 2018 - into the market (and it actually also seems to be the template for Australia’s proposed First Home Loan Deposit Scheme). Indeed, although the upwards trend in FHBs’ market share has flattened off, at 23% of purchases in April it’s still a high figure by past standards.
 
Auckland % share of purchases (Source: CoreLogic)
 
 
It’s also interesting that FHBs still have a strong presence in the main centres (e.g. see Auckland in the third chart), even though property generally costs more than in regional markets. Our take on this is the same as what BNZ Chief Economist, Tony Alexander pointed out in his coverage of our figures in his weekly article on May 2nd - along with more amenities and activities, the big pull for the main centres is better job opportunities (especially in sectors such as banking, law, financial services).
 
Hamilton % share of purchases (Source: CoreLogic)
 
Speaking of Auckland, we often hear the complaint that local house prices have been pushed up by an influx of equity-rich buyers from our biggest city. This is undoubtedly a factor at certain times and in certain towns/suburbs, and Hamilton is currently one to watch. The fourth chart is a variation of the figures – splitting investors not by cash/mortgage, but by local/Auckland – and it shows that from a trough of 6% in mid-2018, Auckland investors have raised their share of property purchases across Hamilton back up to 10%. It’s well below the figure of 17% in 2015, when investors in Auckland had their own specific LVR rule and were looking further afield, but the upwards trend is one we’ll be keeping an eye on.
 
 
 
 
 
 
 

 

 

 
When a property market moves sideways (or slightly falls) I’m often asked to review the more granular meaning behind its performance. 
 
 
Top performing Auckland suburbs
Year to 31 March 2019
 
 
Worst performing Auckland suburbs
Year to 31 March 2019
 
 
CoreLogic Head of Research Nick Goodall writes:
 
Recent analysis on the performance of markets across the diverse value ranges revealed that the differences were more about geography rather than value. In this week’s CoreLogic Property Pulse we’ve taken a look at the data at a suburb level to deliver the whole story on what’s really going on..
 
Firstly, we must acknowledge that some results vary from other recently released market analysis. Particularly, REINZ data stating 30% growth or falls in some suburbs of Auckland.  (It’s important to note that the data used  was based on median sales price and only represented what happened to sell over two separate periods). Today, I’m focusing on the actual change in value of all properties in each suburb.
 
Why is that important? A quick comparison of a real life example in Takapuna shows it quite clearly. There are a total of 2,905 residential properties in Takapuna. The median value of these 2,905 properties was $1,781,450 at the end of March 2018.
 
In the 6 months to the end of March 2018 there were 83 residential sales in Takapuna where an agent was involved. This represents 2.9% of all properties. The median sales price of these 83 properties was $1,000,000. Clearly, these 83 properties don’t represent the whole suburb – there were a lot more lower-value (for Takapuna) property sales over that 6 month period than higher-value.
 
Fast forward a year (to the end of March 2019) and the median value of all those 2,905 properties is now $1,713,400 – a drop of 3.8%. This is relatively indicative of a weakening market, as is the case across the city with fewer buyers and more properties for sale.
 
However, the median sales price for the 6 months to the end of March 2019 was $1,300,000; a whopping 30% increase. This is from just 67 residential property sales (by agents), or 2.3% of all properties. So while there are fewer sales overall, a greater share of them are in higher value bands this year than last. Why? It could be anything – from certain agents or agencies dominating one year to the next, to buyers’ confidence shifting in a changing market. We don’t really know.
 
One thing is for sure, the change in a median sales price tells you nothing about the performance of the overall property market in that area.
 
So then, where has the best and worst growth been in Auckland over the last 12 months? The numbers aren’t as stark, but they’re still well worth analysing.
 
As values struggle in the super city, variance in suburbs emerge
 
Auckland suburb value change
Year to 31 March 2019
 
Sticking to the same time period (12 month change to the end of March 2019) we can see from the first table that Mangere wins out with 5.0% growth. Not bad at a time when values are drifting backwards by 1.5% measured across the whole city. Clearly there are still active people willing and able to buy in a flat-to-dropping market. At the moment Mangere is dominated by first home buyers with 48% of all sales in 2019 going to this group.
 
At the other end of the Auckland ‘leaderboard’ we see the North Shore dominates. In Belmont, property values have dropped 6.8% over the 12 month period analysed. This is nothing to panic about given most owners should have had equity of at least 20% when they bought, thanks to the RBNZ’s loan-to-value ratio (LVR) restrictions, but of course a noticeable drop for anyone hoping for or relying on capital growth for their investment to stack up. And investors have noticeably reduced their activity in this market.
 
Top performing suburbs nationwide
Year to 31 March 2019
 
 
Worst performing suburbs excluding Auckland
Year to 31 March 2019
 
To get a quick snapshot across the city we can visualise this on a map. Here, the weakness across most of the North Shore is plain to see and pockets of growth, though sparse, are visible in South Auckland.
 
Looking outside Auckland, we get further confirmation of the strength of the regions as a whole with suburbs in Rotorua, South Waikato, TaupÅ?, Hastings and Tararua District all experiencing growth of more than 20% over the year. The lower value of property in these places is no doubt a factor in this growth, with low interest rates keeping mortgage payments low.
 
And while Auckland dominates the list of worst performing suburbs nationwide, if we exclude Auckland suburbs we see Takapuwahia in Porirua has also seen significant value erosion (-5.4% p.a.). And while no suburbs in Christchurch are in the top 5, they fill out the top 10. So while we report a minor lift in value across the city (1.3% according to the CoreLogic house price index), similar to Auckland there are pockets of both strength and weakness (mostly out west).
 
For a list of the top and bottom 50 suburbs across the country please see attached spreadsheet and/or enquire for rankings by city.