Currently the mortgage market is in a state of major flux. But amid all the chaos and conflicting reports, is now a good time to be in the mortgage market?
Well, yes and no…. It all depends on your financial situation.
First off, how big is your deposit?
Is it less than 20 percent of the (potential) properties value? In that case, you may be in a bit of a sticky situation – however all is not lost! Up to 15% of each of the major banks customers can fit into this category. Preferential treatment will be given to customers who have:
- Stable incomes and lifestyles- they see this as evidence that you will be able to continue to make payments in the future.
- A strong credit history and good saving practices. A history of good financial decision making and budgeting will put you in good stead. If you have a history of late payments (or worse – debt collection!) you may have more difficulty, although this can be remedied.
- A realistic house in mind- banks are less likely to view you as a desirable lender if you are intending to purchase a property that you may struggle to maintain, or that overextends your finances.
If you meet these guidelines, you are a lot more likely to meet the cut, if not there are other options available to you to help you purchase your dream home- including; second tier lenders, split mortgages, government assistance or attempting to secure a private loan. If you don’t, it may be worth initially talking to a mortgage broker then on their guidance waiting whilst actively trying to improve these characteristics. Either way, talking to a mortgage expert about what options are available to you can be a good option to figure out how to get the cheapest debt possible.
Is your deposit more than 20 percent? If it is, you’re set! You are in the prime position to be snapping up a great rate at the moment. With these new policies in place, you are sure to be a hot commodity as banks are touting for high deposit clients. Just make sure to canvas a wide range of lenders to make sure you get the best deal possible!
But mortgage rates have gotten worse recently… Is it worth holding off?
To put it bluntly – no. In the short term, all signs point to the mortgage market getting harsher as the New Zealand economy gets back on its feet post recession. The Reserve Bank Governor has also confirmed that whilst he delayed a rise in the Official Cash Rate last week, it will be rising early next year- bringing with it higher interest rates for borrowers.
In the wake of these RBNZ statements about future OCR levels, fixed mortgages (or split mortgages) are fast become a wise -and popular- option for many new homeowners. For this reason, it also may be worth discussing fixed options with your broker, and the associated costs and benefits of this in today’s market.
The Bottom Line:
It looks like the mortgage market is a good as it’s going to get in the next few year or more! So if you are serious about entering the property market, now is the time to start talking to your mortgage broker – whilst your competition for properties is still somewhat reduced.
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