Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


First home buyers facing price, repayment headwind

media release


03 July 2014

First home buyers facing price, repayment headwind

Average home loan size and repayment increase significantly over the decade.

Getting a foot on the home ownership ladder can be challenging – particularly in the face of interest rate increases and speed limits on high loan-to-value ratio (LVR) mortgage lending. CANSTAR has analysed the increase in average home loan repayments over the past decade when compared to inflation, and the news for first home buyers is not good, particularly for homebuyers in Auckland.

“Over the past ten years, average property values in New Zealand have been very healthy. It’s great news for established property owners and investors, but not so good for buyers trying to get a foot on the ladder,” said Derek Bonnar, CANSTAR General Manager – New Zealand. “In May 2004, the average home loan interest rate was 7.7%, quite a bit higher than the current average rate of 6.2%. Notwithstanding the lower current rate though, median home loan repayments for New Zeland in general have surged by 51% over the past decade. In Auckland, repayments are up by 61%. That compares to general inflation over the same timeframe of just 28.5%.”

Property LocationMay-04May-14Difference in repaymentInflation
Property Value1Loan Size2Loan Repay3Property Value1Loan Size2Loan Repay3%%
Auckland$339,000$271,200$2,040$625,000$500,000$3,283$1,24361%28.50%
Wellington$262,500$210,000$1,579$412,500$330,000$2,167$58737%28.50%
NZ total$248,000$198,400$1,492$430,000$344,000$2,259$76751%28.50%
Source: www.canstar.co.nz
1. REINZ Market Facts R100 - Median Housing Prices. 2. Loan size is based on a 20% deposit. 3. Monthly Loan repayment based on a 25 year loan and using the average interest rate obtained from RBNZ, M10 Housing for the relevant month and year. This comparison does not include fees and charges.

Mr Bonnar points out that the news could be worse. “Average home loan interst rates are 1.5% lower than they were ten years ago, which is keeping a lid on the repayment pain for first homebuyers. On 2004 levels, Auckland buyers with a $500,000 loan would be paying around $440 more per month than they curently are.”


Who offers outstanding first home buyer service?
Mr Bonnar encourages first homebuyers who are ready to take the plunge to actively negotiate a good-value loan – and potentially cut their loan term costs. To do that, it helps to know what is available in the market. In its annual First Home Buyer Award, released today, CANSTAR has analysed and compared what lenders are offering first home buyers. The institution offering outstanding value? Kiwibank.
“With interest rate rises and the introduction of high LVR lending speed limits, there has been a constant review of home loan rates, but Kiwibank has maintained consistently low rates that have been hard for other providers to compete against, particularly in the floating loan space,” said Mr Bonnar. “This win is the fourth year in a row for Kiwibank, really reinforcing the outstanding value for money that it offers first home buyers.”

In addition to rates, other elements that helped push Kiwibank to the top for first home buyers are the intuitive and educational first home owners’ “How to” guide, which is available on the website, the high number of mobile lenders and the highest number of branches in both the North and the South Island thanks to Kiwibank’s partnership with NZ Post.
Some other great features the institution offers include:

• 100% offset account with no monthly fees, enabling first home buyers to put all their money towards reducing interest costs
• No fees for borrowers to split their loan between fixed and floating
• Unlimited additional lump sum repayments on their floating loan
• The option of a three-month repayment holiday.

“A lower rate and great service can go a long way towards making a happy customer,” said Mr Bonnar. “We congratulate Kiwibank on their win.”
Consumers can download the first home buyer award report on www.canstar.co.nz

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fossils: Ancient Penguins Lived Alongside Dinosaurs?

Penguins are much older than previously thought and their evolution probably dates back to the days of the dinosaurs, according to research on the fossilised leg bone and toes of a giant ancient penguin found in rocks near Waipara, North Canterbury. More>>

No Voda/Sky: Commission Declines Clearance For Merger

The Commerce Commission has declined to grant clearance for the proposed merger of Sky Network Television and Vodafone New Zealand. More>>

ALSO:

EARLIER:

Power: IEA Report On New Zealand's Energy System

Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. More>>

ALSO:

NASA: Seven Earth-Size Planets Around A Single Star

NASA's Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water. More>>

ALSO:

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news