Tony Alexander Mortgage Advisers Survey – June 2021 - Property News AU/NZ | propertynoise.co.nz & propertynoise.com.au

PHOTO: Tony Alexander

Caution continues

Each month since June last year we have surveyed mortgage advisors throughout New Zealand asking them what they are seeing. The responses which these advisors can provide give us early insight into changes that are happening in buyer behaviour in particular, well before such changes show up in any of the official datasets.

We also gain unique insight into changes in bank lending practices which are not available from any other outlet.

This month advisors have again noted that they are seeing fewer first home buyers and investors. But the intensity of the easing off in demand has reduced slightly for both groups, whilst the increasing discussion about interest rate changes may account for a lift in enquiries about refinancing.

More or less first home buyers looking for mortgage advice

For the third month in a row, and following the March 23 tax policy announcement, our survey has revealed a decrease in the number of first home buyers being seen by mortgage advisors.

A net 9% of our 57 respondents have said that they are receiving fewer requests for information from people buying a property for the first time. This is an improvement from a net 15% last month and 13% in April. But as the following graph shows, conditions remain weaker than at any time during 2020 except August.

Taken in conjunction with the results for investors and feedback in other surveys, it is clear that people contemplating the biggest financial decision so far in their lives are feeling uneasy. However, data from CoreLogic tell us that in April there was a rise in the proportion of property sales going to first home buyers to 23% from 21% in March and 22% in February.

This change, in spite of first home buyer caution, arises because of the greater pullback in market presence of investors, discussed below.

More or less investors looking for mortgage advice?

A net 53% of our respondents in this month’s survey have reported a decrease in the number of investors coming forward for mortgage advice. This represents the second month in a row when this measure has improved. But at -53% it clearly signals substantial wariness on the part of investors, and the change from a peak period of weakness in April of a net 78% pulling back is not all that large.

The government has clarified the rules regarding new builds and things are in line with the broad outline announced on March 23 regarding loss of ability to deduct interest expenses and extension of the brightline test – both for investments in existing houses. Better understanding of the tax changes may see some further easing off in the intensity of investor withdrawal from the market. But discussion about rising interest rates is growing and the Reserve Bank is to be given the ability to use debt to income (DTI) lending restrictions in future years. This implies a structural easing off of investor demand.