Potential home buyers urged to consult mortgage advisers

Tenants should be consulting mortgage advisers in an effort to buy a house as rents skyrocket, says Tim Kearins, Century 21 New Zealand owner.

He says many tenants might be surprised at what can be available with the help of mortgage advisers who can provide information on government schemes and pulling resources together.

His comments come after Trade Me Property revealed Auckland is now the most expensive region in the country to rent, after the median weekly asking price rose to $660 in May - up 10% in just 12 months. At the same time, nationwide, median weekly asking rents are up to a record high of $610, meaning tenants are paying an extra $35 a week or $1,820 more a year than in 2022.

“It appears that after large pay increases in many industries throughout last year, landlords are still feeling confident to ask for more, says Gavin Lloyd, Trade Me’s property sales director.

But he expects rents to taper off later in the year as landlords respond to stalling wages and tenants’ lack of disposable income. “Until then, renters' wallets will feel the pain,” he says.

Kearins says given the sky-high rents and the buying opportunities, flatmates, friends and family members should also look into collectively pulling a deposit together and convincing a mortgage adviser or bank of their ability to service,” Kearins says.

“First-home buyers struggling to get over the line, should also consider a tenant to help their bankability.

The Reserve Bank’s recent easing of the Loan-To-Value Ratio (LVR) restrictions is also helping more first-home buyers (FHBs), not to mention that vendors are getting more realistic on their price expectations. The Reserve Bank has also indicated that future rises to the Official Cash Rate (OCR) are not expected.

First home buyers remain a solid presence in the property market, with a 24-25% share of purchases over the first quarter of this year, and now into April and May.

To be fair, says CoreLogic chief economist Kelvin Davidson, the number of FHB purchases is still quite low, but reduced competition from other buyer groups still means finance-approved FHBs are enjoying conditions at present.

Kearins says coming up with a sufficient deposit is often the biggest hurdle for tenants who want to become buyers, but there is help available through the Government’s first-home buyer assistance. Schemes include First Home Grants, First Home Loans, and First Home Partner.

First Home Partner is a shared ownership scheme helping first-home buyers buy a home together with Kāinga Ora. First Home Grants give eligible first-home buyers up to $20,000 for a deposit, while First Home Loans allow eligible buyers to buy a home with a 5% deposit.

Century 21 financial managing director Julius Capilitan says potential buyers should not believe the urban myth that it’s impossible to get finance. We’re still seeing plenty of approvals from banks and plenty of happy customers,” he says.

He says this winter is a good time for Kiwis to get on the property ladder. “Talk to a mortgage adviser or get on a bank’s mortgage calculator to see what’s possible, and most importantly, homeownership is now in closer reach for many.”

Kearins says it still remains a great way to help people’s long-term security and standard of living.

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