PHOTO: The NZ property market is in a massive corrective mode. FILE
As the number of house sales fall, banks are shifting to focus on grabbing customers as they come to refinance home loans, CoreLogic head of research Nick Goodall says.
A forecast fall of 17,000 house sales, in combination with a fall in the number of borrowers refinancing in the next 12 months, was likely to drive banks to offer more cashback on loans, and cut the margins they made.
Borrowers willing to play the game and shop around before refixing may be able to snag a better deal than they expected, Goodall said.
CoreLogic estimated there would be 78,000 house sales this year, down from 95,000 last year.
That estimate was falling rapidly. Just two months ago, the same model predicted 90,000 house sales in 2022.
And it was likely to fall further, with many of the factors suppressing sales, including interest rates, population decreases, and consumer confidence, likely to get worse, Goodall said.
“The worse those forecasts get, the worse our predictions get,” he said.
Goodall said banks were looking at methods of attracting customers as borrowers came to refix their mortgages.
He said banks were asking questions about who was refinancing, why, and when, so they could time their deals and place their advertising in the right spaces at the right time.
“They have to go somewhere else to find that mortgage share,” Goodall said.
Fewer people refinancing because more borrowers were plucking for long-term rates in order to put off the cost of rate rises that were expected to continue for some time.
Only 48% of mortgages are due to renew within the next year, compare to 66% in mid-2021.
Early signs of banks finding new methods of attracting borrowers could be seen in the return of mortgage cashbacks, Goodall said.
Kiwibank was offering customers 1% of their new home loan as a cash contribution, up to $10,000.
At Westpac all new home loans over $500,000 could be eligible for a cash contribution offer of $5000 to help cover costs associated with buying a home, such as legal fees.
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