More first-home buyers pulling away from property but investor enquiries bounce back - mortgage advisors

A Tony Alexander mortgage adviser survey for May shows less enquiry from first home-buyers.
A Tony Alexander mortgage adviser survey for May shows less enquiry from first home-buyers. Photo credit: Getty Images.

More first home-buyers appear to be taking a 'wait and see' approach to buying a home, with a new survey indicating a drop in mortgage enquiries.

But the survey shows investors aren't pulling back quite as much as last month.

A survey of mortgage advisors conducted by independent economist Tony Alexander in May shows the level of caution among first home-buyers has jumped up a notch.

Among 67 advisors nationwide, a net 15 percent reported seeing fewer first home-buyers in May - up from a net 13 percent in April.  

But fewer investors are stepping back, with a net 67 percent of advisers reporting a drop in investors looking for mortgage advice - an improvement from a net 78 percent seeing fewer investors in April. 

Tony Alexander said indications were that first home-buyers were taking their guide from the "elders" in the market, being investors.

"I think most of the investors and the first home-buyers are in a 'wait and see' pattern," Alexander told Newshub.

"They're waiting for clarification from the Government on the policy rules [around new-builds] and they're waiting to see what other people do."

In March, the Government introduced a raft of changes to help first home-buyers get a foot on the property ladder, and loan-to-value ratio (LVR) restrictions were officially reinstated, restricting bank lending to just 20 percent of owner-occupiers with less than 20 percent deposit (LVR over 80 percent).

"While the Government's intention on March 23 was to dissuade investors from buying existing houses and therefore provide reduced competition for first home-buyers, young buyers have also been scared away for now," the report said. 

Mortgage advisors reported both a tightening and loosening of bank lending criteria. But overall advisor feedback suggests banks are slowly becoming more willing to advance funds for purchasing property.

Fixing for one year was the most popular fixed interest rate option, with a net 43 percent of advisers indicating this as a preference for borrowers, up from 39 percent in April.

The portion of borrowers preferring to fix their mortgage for two years also increased, up from 9 percent at the start of the year, to 35 percent in May. Survey results also showed a slight rise in preference for three-year fixed rates.

Kris Pedersen, managing director of Kris Pedersen Mortgages, said although the Government announcement was geared towards helping first home-buyers, they're often more prone to being wary of volatility.   

 "It's a mix: we've got some who are very happy because rather than missing out on all the auctions, they're now able to be successful," Pedersen said.

But others were stepping back, weighing up whether to buy or wait a few months to see the effects of the Government housing announcement.

"Those who were [actively] looking, we're finding they've been buying over the last few weeks, but those who weren't completely committed are the ones pulling back," Pedersen added.

Following the reinstated LVR rules, the Government housing changes and the introduction of ASB's new-build floating rate, Pedersen said currently new-builds are attracting interest from both first-home buyers and investors.

The full mortgage adviser report can be found here.