It’s not time to panic
Winter is a time when the grass grows more slowly, and when the property market also slows down a little. On a cold, dull day, a property doesn’t usually look its best, and vendors are consequently reluctant to list their homes in the absence of a pressing need to sell.
Traditionally, the market is slow over winter, but revives in spring.
This means that houses remain on agents’ lists for a little longer, which can make the market look weak.
Nationally, the number of house sales is down by about a third from the same time of last year. But Quotable Value says people should not go into a tailspin.
‘‘It’s not that people are negative about investing in property. It’s more a case of ‘do nothing’,’’ says QV research director Jonno Ingerson.
First-home buyers are being hit by banks tightening their purse strings and wanting larger deposits before loaning.
‘‘Criteria have certainly increased,’’ says mortgage adviser Brent Jaslarz, of Mortgage Link Manawatu.
A few years ago, buyers could get 100 per cent mortgages. But Mr Jaslarz says that, although such mortgages are not unheard of in today’s market, they are rare.
First-home buyers with low deposits can still get into a house, however.
‘‘There are still 95 per cent mortgages available. But it’s tough to get them, and the fees are a lot higher.’’
There’s also the Welcome Home scheme – for homes to the value of $200,000 with no deposit, or to the value of $280,000 with a deposit of just 15 per cent of the amount above $200,000.
However, most banks are demanding a 15-20 per cent deposit.
‘‘Westpac will work with 10 per cent and Kiwibank with 5 per cent. National Bank will lend up to 90 per cent, but only to existing customers.’’
How clients can service the loan is also coming under closer scrutiny.
‘‘Budgets and spending are looked at closely, to see what you’re spending your money on. Things like the TAB and the pub don’t look good.’’
Under another change, clients now need to have a greater surplus at the end of the month than previously necessary to ensure they can service the loan.
‘‘A surplus of at least $200 is required now, [compared with only a dollar before at some banks].’’
But Mr Jaslarz says a couple in Palmerston North who are both working should be able to service a $250,000 mortgage with a $15,000 deposit.
Although putting down a small deposit might seem like a good idea, to be able to get into a house sooner, people need to weigh up the pros and cons of either making a low deposit and higher monthly payments or waiting a little longer to come up with a higher deposit.
‘‘Every bank has raised its servicing rates, so a low deposit can cost you more in fees.’’
Waiting game: Nationally, the number of house sales is down by about a third from the same time of last year. But Quotable Value says people should not go into a tailspin.