TSB leads home loan competition

TSB Bank is making a play in the two-year fixed home loan market by dropping its rate to just 4.19%, the lowest two-year fixed rage on the Canstar database.

Canstar's weekly update showed yesterday the rate was available only until March 31.

The next two lowest two-year fixed rates were Kiwibank and Heartland Bank, both of which were offering a two-year fixed rate at 4.25% for a deposit amount of at least 20%.

The average standard floating rate yesterday in the residential home loans market was 5.62%, with a minimum of 5.45% and a maximum of 5.85%. The average one-year fixed was 4.51%, the average two-year rate was 4.61% and the average three-year fixed was 4.86%.

In the investment home loan market, the average standard floating rate was also 5.62%.

Veda data, also released yesterday, showed activity in the New Zealand housing market remained strong. Mortgage applications were up 11.6% in the three months ended March, compared with the previous corresponding period.

The latest figures showed a slow down in the mortgage application growth from the September quarter, when growth was at 21.9%, but data indicated increased housing activity remained, a trend that seemed likely to continue.

Veda New Zealand managing director Carol Chris said the company's mortgage application data, coupled with the strong retail sales figures in recent months, suggested a link between the active housing market and retail sales volumes.

‘‘The positive movement in mortgage application data and the decrease Veda has seen in credit card and personal loan applications over the same time period suggests more home loans, rather than hire purchases or credit cards, are being used as an additional source of funds, which is helping drive retail sales growth.''

The continued strength of mortgage applications was in contrast to the volume of personal loan and credit card inquiries to Veda, which fell by 2.9% and 5.4% respectively in the 12 months to the end of March, she said.

The activity in the housing market continued to be driven primarily by consumers in the 28 to 43-year age group, accounting for 46% of mortgage inquiries in the March quarter.

In recent times, Veda had seen increased mortgage applications by consumers in younger demographics, Ms Chris said.

The rate of inquiries from those younger than 28 increased rapidly in the September quarter (up 38% on the pcp) but also experienced the greatest rate of deceleration in recent months to a 22.1% increase in the March quarter.

‘‘Demand in the housing market, and the use of mortgage loans as a preferred source of additional funds for big-ticket retail spending, continues to be driven primarily by Generation X consumers. Baby-boomers also account for a significant share of the market.''

The dramatic activity shifts seen in the volume of mortgage loan inquiries by Generation Ys suggested that while younger consumers wanted to enter the housing market, they were struggling to gain the same foothold as their older counterparts, she said.

Veda's data highlighted the disparity between older, more financially stable consumers, and the widely recognised ‘‘orphan'' segment of younger consumers across New Zealand who were being locked out of the housing market.

●Veda is a data analytics company and a provider of credit information and analysis in New Zealand and Australia.

 


The generations

•Baby-boomers are people born during the post World War 2 baby boom, approximately between the years 1946 and 1964. This includes people who are between 52 and 70 years old in 2016.

 

•Generation X, commonly abbreviated to Gen X, is the generation born after the World War 2 baby boom. Most demographers and commentators use birth dates ranging from the early 1960s to the early 1980s.

•Millennials, or Generation Y, are the demographic cohort following Generation X. There are no precise dates for when the generation starts and ends; most researchers and commentators use birth years ranging from the early 1980s to around 2000.

 

 

 

 



 

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