Despite the easing of the crunch caused by tightened LVRs and the implementation of the Credit Contracts and Consumer Finance Act, mortgage brokers are still finding it tough going.
In the latest Tony Alexander and mortgages.co.nz survey, mortgage advisers say credit access is becoming less of a barrier to buyers but they are still staying away from auctions and open homes because of falling house prices and talking of people moving to Australia.
Advisers’ comments indicate that implementation of CCCFA rules remains inconsistent between the banks and credit availability overall is tight. However, some easing is evident including greater availability of low deposit lending.
“There still seems to be confusion between mainstream banks on how to interpret the CCCFA rules, all mainstream banks have applied the rules in drastically different ways.
Advisers say as the rules change weekly depending on funding position, it is impossible for them and clients to operate.
The survey results show investor negativity remains with a net 45% of advisers saying that they are seeing fewer investors.
Alexander says essentially, there is no change in the underlying level of investor interest in making a new purchase – low – ever since the announcement of tax changes last year.
He says mortgage advisers say it is getting tougher for investors to borrow from banks in terms of scaling rental income. Essentially clients have to be more able to service the lending on their own bat.
Banks are requiring the age of investment property to be provided, i.e. before or after 27 March 2020.
However, one lender has relaxed some of its criteria slightly but not enough to make a significant difference.
Mortgage advisers say the lender is not scaling rent as much as they were and no longer require evidence of rates and insurance costs for investment properties - although it still takes into account the declared costs in the debt servicing calculation.
Many advisers have noticed investors looking at development options on their existing properties rather than buying another.
Banks messages differ
There have been mixed messages from the big four banks.
One of the big four approached a mortgage company asking for more business. “An application was sent to that bank that day as it promised great turnaround times and a good deal for the client. Application got pushed back by the bank’s broker unit saying couldn’t do xyz for a customer and no promises on time frames. Disconnect.”
Other mortgage brokers say they have noticed there is not much urgency at the banks. One busy broking company pointed out bank turn-around times have blown out massively. “It feels like there are a few things happening that show low appetite right now.
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