Home buyers offer premium

AUCKLAND: Some buyers desperate to get on the property ladder are offering $20,000 to $30,000 more than the asking price and a record jump in loan applications has caused bottlenecks with the banks.

Mortgage brokers said delays in getting loans processed were ‘‘frustrating’’ and the ‘‘boom shows no sign of abating’’.

Many of the major banks said more staff had been deployed to deal with the increase in applications — which in one case were up 7% in the past six months compared with the corresponding time last year — and speed up the process.

Chris Rapson, owner of Rapson Loans and Finance, said his business was flat out and it was taking twice as long to get loans processed.

The situation was frustrating and many clients and real estate agents were getting disappointed, he said.

In his view, the banks were not putting in the resources.

‘‘I don’t think they believe this boom is going to last, but there is no sign of it abating.’’

The historically low interest rates meant buying was cheaper than renting, he said.

Ownit Rotorua manager and registered financial adviser Hayley Hubbard said some loan applications that would usually take five days ‘‘are taking 10 days just to get looked at’’.

‘‘So there is definitely a longer turnaround time.’’

Ms Hubbard acknowledged the banks were working towards lowering application times and some had succeeded.

The requirements for home loans had also become harder and she knew of one or two brokers who had lodged applications with more than one bank, which could clog up the system.

She said some clients had also opted to offer $20,000 to $30,000 more than the asking price because of the conditions they needed to add to the application.

‘‘They are scared they will miss out. So, in my view, there is a lot of panic buying happening at the moment.

‘‘You have got first home buyers who are freaking out, who want this house, who are competing with developers who potentially have the money and are going in with the cash.’’

The low interest rates, combined with expats returning from overseas, added ‘‘to the franticness of people trying to buy in this market’’.

Simon Anderson, managing director of Realty Group Ltd, which owns Bayleys and Eves, said it was now putting in a 15 working days finance clause compared with five or 10 ‘‘because we know the process is going to take longer’’.

‘‘The banks are looking for more information and checking credit ratings, the ability to repay and security.’’

He said the banks were being responsible but the delay was causing problems, especially if the buyer was going to auction or under pressure because of multiple offers on the property.

‘‘If you don’t have the finance ready, then obviously it makes it very difficult.’’

Mr Anderson said property had become attractive partly because of Covid as people wanted security and those people were making decisions based around the competition. Kiwibank borrowing and investments manager Richie McLay said application volumes in the past six months were up 7% on the year before.

A Westpac NZ spokesman said it was redeploying staff to help manage the high volume of mortgage applications.

‘‘Our turnaround times are within five days, depending on the settlement date and other individual factors, and we continue to review our processes to improve the experience for our customers.’’

ANZ was also seeing record high demand for home loans, which has created ‘‘capacity challenges’’.

Competition in the home loan market stepped up a notch again last week when ANZ moved to match rival Westpac’s 2.29% on a oneyear fixedterm mortgage alongside BNZ.

The rate is the lowest for the major banks although other banks are still cheaper.

Heartland Bank is the cheapest having 1.99% fixed over one year. — The New Zealand Herald

❛ You have got firsthome buyers who

are freaking out, who want this house, who are competing with developers who potentially have the money and are going

in with the cash