Banks offer incentives as market cools
Desperate banks are offering a range of deals to lure customers, as a perfect storm hits the housing and loan market.
BNZ and KiwiBank are both offering customers 1% cash back (with conditions) – in some cases, up to $20,000 – when taking out home loans.
ANZ has launched a special 1% interest rate for current borrowers who want to make their homes energy efficient. This could mean installing solar panels, heating and insulation or double glazing. The loan, of up to $80,000, could also be used to purchase electric or hybrid vehicles.
It comes as falling house prices, tough lending terms, buyer hesitation and rising interest rates are making potential borrowers nervous, leading to lower mortgage applications.
ANZ’s Ben Kelleher says customers have asked for incentives like the energy efficiency loan.
“The market has slowed down, you also see it in house sales, the fear of missing out has gone and the fear of paying too much has arrived, it will be interesting to see what happens in the summer months” , did he declare. says 1News.
Economist Hannah Ouellet of Sense Partners says the fact that the housing market has cooled significantly means it is also a buyer’s market when it comes to competition from banks. “Banks are also competing for customers.”
READ MORE: Big banks cut two-year mortgage rates
However, she believes that many of the offers on offer target those with higher incomes, with higher deposits.
“Reading between the lines of the terms and conditions, it becomes clearer that the bigger the loan, the bigger the cash back.”
And it’s not just the banks trying to sweeten the deal. Signature Homes is offering fixed-price construction costs for its new builds — at a time when problems finding building materials and labor shortages are driving costs up.
Gavin Hunt of Signature Homes says it’s very difficult for people to get financing from banks if they don’t know the final cost. And “customers hear about material shortages and supply chain difficulties and it makes people nervous.”
Ouellet says that, as always, potential borrowers should look around.
“What buyers need to look for is the trade-off between the interest rate offered to them and the deal itself, as there are other challenger banks that offer lower interest rates but don’t have these refund offers.”
The Reserve Bank’s next decision on the official exchange rate will be on Wednesday. It is widely expected to raise the rate another 25 or 50 basis points, from the current 2%.
While some banks have already factored this in with their interest rates, with the housing market changing, expect competition and volatility to continue.