A Queenstown broker claims conditions for new and existing mortgage clients are a perfect storm.
Roost mortgage broker Mark Pullar (pictured right) says he’s never been busier – and that’s due to record low interest rates and competition amongst banks.
“We’re at least 40 per cent up in mortgage volume compared to this time last year with no sign of it abating.”
Pullar says the increased activity stems both from first-home buyers and existing mortgage holders renegotiating their rates.
Banks have changed their tune, Pullar notes.
“We went through a period where banks were more focused on taking deposits than new mortgage-lending business. Now there’s a lot of competition out there and the banks are very aggressive.”
First-home buyers now only need five per cent deposits – not the previous 20 per cent – and that’s driving demand for properties up to $500,000, he says.
Banks are also discounting rates, he adds.
“I’ve been getting as low as 4.75 per cent fixed for 12 months – when was the last time you heard of rates with a ‘4’ in it?”
Pullar says many first-home buyers have also reached the three-year threshold with their KiwiSaver schemes – meaning they can put their own and their employer’s contributions towards the five per cent deposit.
“People who came to me a year-and-a-half ago who couldn’t buy are now finding they’re able to – and that’s fantastic.”
Activity by first-home buyers in particular has contributed towards strong Wakatipu residential sales volumes since February.
The 80 sales recorded in May was the highest monthly figure for five years.
Pullar says another bonus for first-home buyers is the supply of sub-$500,000 properties drying up.
“There’s an opportunity for first-home buyers to feel comfortable there’s going to be upward pressure on their prices.”
Competition amongst banks is also making it easier for existing mortgage holders to renegotiate rates, he says.
“A lot of people fixed before the February 2011 Christchurch earthquake at rates around 6.7-7 per cent and are up for break fees in the thousands to exit these.
I’ve been able to help multitudes of clients recently exit at no cost, either by negotiating with their existing lender or arranging for a new lender to cover the cost.
I had one investor client have over $10,000 of break fees covered – plus a reduction in rate of almost two per cent and an annual interest saving of $7000.”
Pullar says this mightn’t last long.
“There is an opportunity right now to have your broker use their skills to put you in a significantly better financial position but you have to act fast as it will not last.”