THE ECONOMIC BACKDROP
New Zealand ’ s housing market is heavily influenced by the Reserve Bank of New Zealand ’ s ( RBNZ ) monetary policy . Recent Official Cash Rate ( OCR ) reductions have made borrowing more affordable , fuelling current buyer demand .
However , Coulson says that positive momentum in this leg of the property cycle will be moderated by the RBNZ ’ s Debt-to-Income ( DTI ) lending restrictions . “ Introduced earlier this year following a ‘ will they , won ’ t they ?’ consultation period , the initiative limits owner-occupied borrowing to six times income ( seven for investors ), acting as a guardrail against speculative growth in the housing market .
“ Historically , periods of high housing inflation were party driven by high DTI lending , particularly amongst existing owner-occupiers and property investors , who leveraged the equity in their assets to purchase more .
“ The controls temper capacity in the market for this speculative behaviour while capping the extent of price growth . For sellers , this means today ’ s conditions are a ‘ Goldilocks ’ zone of sorts – favourable with uncertain prospects for escalation and not guaranteed to last .”
“ For sellers , this contributes to a growing feeling that we ’ re in ‘ sweet spot ’ territory . Buyers are financially incentivised to act but also feel a sense of urgency as global factors suggest potential upward pressure on future interest rates .
“ The global economic landscape adds complexity here . Donald Trump ’ s re-election introduces potential trade and fiscal policy shifts that could ripple through New Zealand ’ s economy .
“ Proposed tariffs on imported goods , a strong nationalist stance , and an expansionary fiscal approach are likely to raise bond yields , which may , in turn , push up global borrowing costs .
“ For a trade-reliant country like New Zealand , which exports around $ 8.8 billion worth of products to the U . S . each year , increased tariffs could impact export earnings and weaken the New Zealand dollar , adding inflation pressures domestically .
“ These uncertainties make it all the more compelling for homeowners to act now while the market remains relatively stable .”
MONEY MARKETS
Mortgage lending rates have dropped significantly since mid-year , driven by competition among banks and proactive reductions in the OCR . Lending estimates show that around $ 70.6 billion worth of fixed-term mortgages are due for repricing before the end of the year , and borrowers are exploring their options , motivated by the lower cost of borrowing and the prospect of locking in advantageous rates before they rise again .
Source : RBNZ , Macrobond , ANZ Research
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