All the extra help your buyers need

11/10/2019

As we approach the end of the year, official cash rate cuts continue to make headlines on both sides of the Tasman.

In New Zealand, the OCR could go as low as 0.75% by year-end – a significant drop from the beginning of 2019 when the OCR was at 1.75%. In the meantime, just a couple of weeks ago, the Reserve Bank of Australia cut its official cash rate by 0.25% to an all-time low of 0.75%.

According to a recent article by the Australian Financial Review, the construction industry is hoping that lower borrowing costs and easing credit criteria will boost demand by owner-occupiers for new housing. So far, the RBA rate cuts have at least helped stabilise home prices. As HIA economist Tom Devitt pointed out, this could be a sign that confidence in the property market has improved, but the volume of property transactions remain low. “We will need to see that improved confidence translates to greater numbers of active market participants in order to halt the contraction in residential building,” said Devitt. 

In New Zealand, where another rate cut is expected to take place next month, these are certainly interesting times for the property and lending space:

  1. As you may have heard, under the recent KiwiBuild changes, the Government-backed First Home Loan (previously knows as Welcome Home Loan) and First Home Grant (formerly HomeStart grant) now only require a 5 per cent deposit instead of 10 per cent. These are available for all first-home buyers (provided they meet certain criteria) and offer welcome support to those struggling to build a deposit.

  2. Meanwhile, the FMA’s latest annual report on the KiwiSaver scheme has confirmed that KiwiSaver is helping more and more New Zealanders get on the property ladder. One of the most interesting takeaways is that first-home buyers are withdrawing from KiwiSaver nearly as much as retirees; over-65s withdrew $1.04 billion over the year (up 43 per cent year-on-year), while first-home buyers withdrew $953 million (up 35 per cent YOY). More than 39,600 first-home buyers tapped into their accounts, with an average $24,000 going to boost their property deposit.

  3. Lastly, with new non-bank lenders entering the mortgage market, Kiwis have a broader array of options available to them. And that’s where working with an experienced mortgage adviser can make all the difference.

At Mortgage Link, we are committed to helping Kiwis secure all the extra help they deserve – be it through KiwiSaver withdrawals or grants. Plus, our friendly advisers know the market inside and out and work hard – on behalf of the client – to negotiate competitive rates and conditions with the lenders, including banks and non-bank lenders. Get in touch with us or visit our website to find a Mortgage Link adviser in your area.