Home Loans

Home Buyers: Why Now Could Be Your Time

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Much to the dismay of first home buyers - and the delight of homeowners - house prices have been rising rapidly over the last few years.

Demand has exceeded supply, and it has become increasingly difficult to find a bargain, let alone anything to suit your needs. But we're finally starting to see a shift. What goes up must come down, and the market is correcting.

What's going on out there?

Interest rates are on the rise, and demand is slowly waning. Property prices have started to drop and are predicted to dip by 8 to 10% in the next couple of years. Auctions have reduced, and listing amounts have dropped to attract buyers. First home buyers could start seeing bargains again soon, especially in the bigger cities. If you're in the market to buy, get ready.

Banks, rates, and takeaway coffees.

Good news for those looking to borrow: Major banks and lenders will stop "micro scoping" bank statements from June. That means your weekly takeaway coffees and Netflix subscription won't be under scrutiny - though the lender will still go through your bank statements, so keep your account conduct tidy.

Banks will increase their assessment rates, making it harder to get a mortgage across the line as rates rise. It will be harder to lock in a good interest rate in this market - the special three-year rate has gone up to 5%. 

However, first home buyers will have more opportunities moving forward as the banks have opened doors for deposits below 20%. Rather than rushing off to the bank, it's imperative to engage a reputable adviser to consider which lender/bank would be the right fit. 

New builds.

The construction world has its own set of hurdles, making existing homes more attractive. There are also upcoming changes to the special construction interest rates some of the banks have had on offer. Read our recent article to learn more.

What to do if you want to buy a property.

Be ready to take action. Depending on your timeline, here are some steps you can take to prepare for your purchase:

  • Keep your account conduct/spending habits tidy for 3-6 months before application. 
  • Create and stick to a budget and compile a list or spreadsheet of your monthly household expenses, including food, transport, alcohol/nicotine, utilities, entertainment, personal care, and insurance.
  • Avoid short term debts, and prioritise repaying any that you already have. If you have multiple short-term debts, your home loan adviser will be able to guide you on the best course of action (which ones to repay ASAP, debt consolidation etc.).
  • Get your documents in order in preparation: ID (Passport), pay slips, IRD earnings summary, credit card statements, student loan summary, proof of savings etc.
  • Engage a home loan adviser to determine your borrowing capacity.
  • If you're seriously in the market to buy, speak to your adviser about getting pre-approval so you can pounce when you find the right property. 

Things are ever-changing out there with property and lending, and now is not the time to go it alone. An experienced adviser will go the extra mile and help you through the home buying process.

This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.


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