Home own­er­ship out of reach for many

Franklin County News - - Property - By JAZIAL CROSS­LEY

Lower av­er­age house prices and down­ward pres­sure on in­ter­est rates meant home loans hit the most af­ford­able lev­els in Septem­ber that New Zealand has seen in eight years.

The Roost Home Loan Af­ford­abil­ity re­port said last month of­fered the best lev­els of loan af­ford­abil­ity since 2004 with 20.6 per cent of the av­er­age in­come of a cou­ple on the me­dian wage needed to meet pay­ments on a float­ing 80 per cent mort­gage for a me­dian-priced house.

This was down from 20.7 per cent in Au­gust this year. For sin­gles on the me­dian wage, it would take 50.7 per cent of a salary to meet mort­gage pay­ments, down from 82.2 per cent in Septem­ber 2007.

But home own­er­ship is still priced high for most peo­ple earn­ing the me­dian take home pay a week – al­most $800, the re­port said. ‘‘ Es­sen­tially the me­dian in­come for the typ­i­cal buyer is not high enough to buy a me­di­an­priced house, even with a 20 per cent de­posit,’’ it said.

The me­dian house price eased by $5000 to $350,000 last month and economists are pick­ing the Of­fi­cial Cash Rate will be kept at 2.5 per cent into 2012, so float­ing mort­gage rates are ex­pected to stay low.

Float­ing in­ter­est rates were 5.73 per cent on av­er­age at most banks in Septem­ber, un­changed since Au­gust but down 51 ba­sis points from a year ago. More than half of mort­gage hold­ers na­tion­wide are on float­ing op­tions.

Rhonda Maxwell, spokes­woman for mort­gage bro­ker Roost Home Loans said banks were ea­ger to lend. ‘‘First home buy­ers are see­ing low in­ter­est rates and a sta­ble out­look into early next year, which is im­prov­ing con­fi­dence.

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