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NZ Property and Mortgage Market Update, 30 April 2023

An update on the New Zealand mortgage and property market in April 2023.

At the tail-end of Autumn, the weather is cooling and so is the market, while the Reserve Bank continues to put the freeze on with a 0.5 percent increase to the Official Cash Rate (OCR) (from 4.75 percent to 5.25 percent) in the latest review on 5 April 2023. The Reserve Bank’s view is that inflation is still “too high and persistent,” but how much longer will the interest rate hikes continue?

The 0.5 percent increase took many commentators by surprise – most of us predicted an increase more like 0.25 percent. But in that case,there very likely would have been a second 0.25 percent increase at the next review, at the end of May. As it is, we’re now wondering what will happen on 24 May. If there is another 0.25 percent increase, that may be the end of interest rate hikes for now.

Despite the claims about inflation, it's clear that many people are struggling to keep up with their mortgage repayments along with the increase in the cost of living, and property prices have certainly cooled across the country (in some places more than others, as Christchurch continues to demonstrate a degree of resilience).

If we are not already at the peak of interest rate levels, we are certainly very close to it. So when will they start to come down? Here at NZ Mortgages, we’re hoping to see interest rates starting to drop the end of 2023.

With the possibility that we are close to the peak of interest rate levels, our general advice is to fix your mortgage for no more than one year. Every borrower’s situation is different, though, so if your mortgage is up for renewal, or you need to refinance or restructure, we would recommend that you get in touch with us to talk it through. If you have any concerns about making your mortgage repayments, contact us ASAP as we’re happy to have a confidential chat about what to do next. It’s definitely a situation where it’s better to be proactive.

If you are in the market to buy a home, however, this moment could be a golden opportunity. Bank lending is down 30 – 40 percent, the biggest drop in decades, so there are lots of great offers out there to try and capture business from those who are borrowing. With house prices very realistic at the current time, and the likelihood that the LVR restrictions will ease slightly on 1 June 2023, the timing is great for those buying their first home, and those selling and buying will also find some tempting deals on offer. Talk to the team at NZ Mortgages to get started with your mortgage pre-approval or home loan application.