The number of real estate loans granted has fallen in line with real estate prices. Photo/Getty Images
Fewer people applied for home loans compared to the same period last year, despite banks offering cash incentives of up to $20,000.
People who have to reset their mortgage also face hundreds
additional dollars per week in interest increases, which decimated some budgets.
A couple who live in the Tauranga suburb of Parkvale paid $715,000 in September last year for their first home and are expected to find more than $200 more a week when their mortgage is renewed.
The pair, who asked not to be named, said the significant jump will force them to cut spending.
“We’ll have to tighten our belts around things like groceries and going out.”
Young professionals said rising interest rates were concerning and while they could absorb the costs, others were not in the same position.
In their opinion, houses were not affordable in New Zealand.
“The idea that you can just save money for a deposit when home values are rising much faster than most incomes is ridiculous. And rising interest rates forcing mortgage repayments to rise is a blow to both sides.
“We don’t see an easy way out of inflation to bring interest rates down quickly.”
A Westpac spokesperson said there were fewer applications for home loans compared to the same period last year, reflecting the current housing market.
However, he had seen considerable interest in his Bay of Plenty First Home Buyer seminars in Tauranga, Tokoroa and Taupō.
Westpac was offering first-time home buyers five chances to win $50,000 off their mortgage balance if they pull out before September 30 and those looking to refinance with another bank may be eligible for help to cover associated costs.
BNZ would give 1% of the value of a new home loan or up to $20,000 to borrowers.
Karna Luke, BNZ’s executive client, products and services, told NZME the bank hoped to give people more cash on hand to cover the costs of buying and selling property.
A Kiwibank spokesperson said its cash back incentive of up to $10,000 has ended, but its one-year fixed interest rate has dropped to 5.19%.
She said the bank recently launched Co-own to provide an alternative way to buy a home.
”We have had a positive response and will continue to look for ways to help Kiwis achieve their home ownership goals.”
ANZ incentives included a Blueprint to Build offer with a discounted rate. There were cash contributions for attorney or appraisal fees and first-time home buyers could get $3,000 if they kept their home loan with ANZ for at least three years.
A spokeswoman said he was supportive and open to different ways to get people on the property ladder.
“This could include helping parents or family members, either giving money for a deposit, the parents themselves providing a loan for a deposit, becoming a co-borrower, or providing a guaranteed by means of a limited warranty to reduce the LVR.”
A spokesperson for SBS Bank said home loan demand levels were good and first-time home buyers could be eligible for $2,000 with their home loans.
Joint residency applications, where parents help their children buy a home, were also popular.
All cashback offers were subject to criteria.
Real Estate Institute data showed 13,861 homes were for sale in June last year, but that figure jumped to 25,271 nationwide last month.
National home prices rose a median 1.2% from $840,000 in May to $850,000 last month.
However, in Tauranga the median house price fell to $970,000 in June from $1 million in May, while in Rotorua it rose from $649,000 to $615,000 over the same periods.
REINZ regional manager Neville Falconer said the number of sales in the Bay of Plenty was down 41.3% last month from June and the market was a challenge.
“Buyers are still worried about paying too much, leading to hesitation in the market and fewer sales. Properties are also spending more time on the market before selling compared to the same period last year. “
Meanwhile, the Reserve Bank raised its official exchange rate by 50 basis points to 2.5% in its latest attempt to fight inflation.
CoreLogic NZ chief economist Kelvin Davidson said that in terms of annual mortgage repayments, this equates to around $2,050 extra per year for every $100,000 of debt.
“This will test the finances of all borrowers, let alone those new to the market, and may mean that the affordability equation does not improve much, even as incomes rise and housing prices go down.