Current Market

It has been a very quiet month in terms of news about the rental sector. The New Zealand Property Investors has issued only one news article and that was on the lift of the OCR to 2%. This has obvious on-going impact on interest rates and given further increases in the OCR are forecast it does spell future difficulties for mortgage holders.  

At the beginning of the year interest rates were in the order of 2.5%. Today they are more like 4.2% or higher. What does that mean for mortgage holders?

It is not uncommon for mortgages today to be in excess of $800,000 but we note that the average mortgage in the country sits at just over $400,000.

$400,000 @ 2.50% interest rate = $10,000

$400,000 @ 4.25% interest rate = $17,000

OR another $135 per week out of net income for the mortgage holder.

We appreciate that this is looking at the issue very simply and that the true increase over a term principal and interest mortgage would be different but it does illustrate the problems many are now facing. It will have been offset in part by the fact that lending institutions always assess the risk using a higher interest rate than that they are going to actually lend at but even so! To this point there has been no significant change in the number of forced mortgagee sales reported but this is anticipated by the commentators. 

Most of the news has been around the real estate sector. We have selected some of these as they may well be of interest.

As mentioned above the average mortgage nationwide now sits at just over $400,000. But some other statistics.

  • This is up 20.8% on the average mortgage in April 2021 ($336,000)
  • This is up a whopping 64% on April 2019 (247,500)
  • The amount of money actually advanced on mortgage in April 22 was $5.66 billion
  • The number of mortgages issued in April 2022 was 13,939. Not far off half of April 2021 when this was 25,261.
  • First Home Buyers accounted for only 18.5% a slight increase over March 2022. The average mortgage for FHB’s was $592,000
  • Investors accounted for 17.1% of the April lending. This is the lowest share for this grouping in any month so far this year. However, there are no signs that investors are ‘quitting the sector’ as predicted by several commentators when tax rules were changed.