Young people are making mortgage inquiries at a record rate
to beat home loan restrictions which come into force on
October 1, a credit bureau says.
Latest data from Veda showed house-buyers aged 28 and under
were inquiring about mortgages at rates not seen in the last
It was evidence that first home buyers were shopping around
for mortgages so they could buy before the low-equity home
lending restrictions came into force, Veda managing director
John Roberts said.
Gen Y inquiries for mortgages increased by a 51.25 per cent
in August compared with August last year, Mr Roberts said.
"We have never seen an increase in applications like this -
the data is compelling evidence that first home buyers are
trying to buy before the Reserve Bank restrictions
effectively limit the number who can buy with a 10 per cent
deposit or less."
Mr Roberts believed the Reserve Bank's high loan-to-value
ratio (LVR) lending would deliver a spike in borrowing and a
spike in housing sales.
"With limited supply that means prices for first homes could
well increase," he warned.
In what may be attempts to circumvent the LVR restrictions,
personal loan inquiries increased by 23.58 per cent in August
compared with August 2012, Mr Roberts said.
"It is well known that house buyers who don't have a large
enough deposit to get a mortgage from a mainstream bank will
borrow the deposit from a second tier lender - like a finance
Mr Roberts also said there were indications the Reserve
Bank's high loan-to-value ratios may have limited impact on
Auckland's housing bubble.
The Reserve Bank today left the official cash rate unchanged
at 2.5 per cent - where it has been since March 2011 - but
changes to the wording of the bank's monetary policy
statement, along with alterations to its forecast interest
rate track, brought it more line with the market's view on
where rates will go next year.
Reserve Bank Governor Graeme Wheeler said rapid house price
inflation persisted in Auckland and Canterbury.
"As has been noted for some time, the Reserve Bank does not
want to see financial or price stability compromised by
continued high house price inflation," he in a statement.
LVR restrictions were expected to help slow the national
housing market, he said.