Falling interest rates making property more attractive
Friday 3 April 2009
Residential property investors believe that falling interest rates are making residential property investment more attractive, according to the latest quarterly survey of investors run by Mike Pero Mortgages and Landlords.co.nz.
By The LandlordA survey of more than 550 property investors found falling interest rates are prompting investors to buy property, but they are frustrated by the banks’ attitude to lending.
“This is the perfect time to buy, both for investors and for private buyers. House prices are cheaper than they have been for a number of years and with falling interest rates, home affordability has improved considerably over the past year,” says Mike Pero chief executive Shaun Riley.
Over three-quarters of those surveyed (78.5%) said falling interest rates were making property investment more attractive. But a large proportion of comments made by those surveyed said the biggest issue holding back property investors is the attitude of banks to lending.
“A large proportion of respondents felt that banks needed to loosen up their lending criteria. Currently, most banks require borrowers to have at least 20 percent equity in a deal before they are prepared to offer finance,” says Riley.
“The feeling amongst the investors surveyed was that banks are not assisting the recovery of the economy, are holding on tightly to their money, are restricting the cash available on revolving credit facilities and charging unreasonable break fees,” he says.
Although house prices have come back nearly 10% in the past year, the survey results showed nearly 60% of investors believed they would continue to fall over the next six months. This was reflected in the buying intentions of those surveyed.
The survey results showed that 11% of property investors planned to buy another property in the next two months, while 12% were looking to acquire more property by the end of September. A further 23% intended to purchase in the last quarter of the year. In total, nearly half of those surveyed (46%) were planning to buy again this year.
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