Well, it’s that time of the year again, when we look back at the major events of the year that have shaped the home loan and insurance markets, with an eye on the future and what 2016 may have in store. It’s been a year where the housing market continued the growth which we saw starting in 2014, the major difference being that instead of just being contained to the Auckland market, the whole of New Zealand has seen a lift in property sales and value. In the Eastern Bay, the main challenge to Real Estate agents as we enter the last few days of the year, is finding available housing stock, as those properties that have been well presented and priced for the current market, already have contracts on them or have been sold already. 

 

So, what helped drive the local housing boom? Two major factors have come into play. Firstly, there have been a number of people who have sold property in Auckland at considerably higher prices than they paid or had to borrow to secure them. This has left a large amount of buyers able to purchase similar type properties with little or no need for borrowing. The other helpful aspect to the continued lift in property sales and market interest has been the lowering of interest rates. The Reserve Bank have cut the Official Cash Rate four times this year, and it now sits at 2.50%, which is a whole one percent lower than this time last year. The latest cut led to another drop in floating rates, but at this stage fixed rates have stayed fairly level. The impact of the weakening Chinese and Australian economies will have an effect on what happens with our interest rates, due to the fact that those two countries are our largest trading partners. The recovery of the USA as the world’s largest economy will also affect our currency and may in time lead to a rise in interest rates, but no timeline has been provided and at this stage most economists are not forecasting any lifts to the Official Cash Rate for the next year.

 

Another Reserve Bank decision has made a difference this year, when a ruling came in at the start of November that any investors with rental properties in Auckland would need at least 30% equity in their properties when borrowing. This caused a noticeable reduction in sales in the Auckland market, with Tauranga, Rotorua and the Eastern Bay being the main beneficiaries of the purchasers change of appetite.

 

In June, legislation was passed in relation to the Credit Contract and Consumer Finance Act 2003 (CCCFA), which brought in a new code of conduct surrounding lenders obligations as “responsible lenders”. This has meant that all borrowers have to pass more stringent calculations when applying for loans of any description. It has also meant that co-borrowers or guarantors, who previously were able to just offer up a property to help a family member meet equity guidelines, now need to pass the same calculators as those borrowing the funds. 

 

So, all in all it has been a very busy year for lenders and those arranging home loans. Insurance providers on the other hand have had a fairly quiet year in relation to change, with the only major differences being enhancements to the products available rather than legislation changes. The rising cost of healthcare and the aging NZ population will be the biggest challenges moving forward, as more people find themselves in a position where they claim from their insurer or ACC for health and require income related cover.

 

So, as 2015 comes to a close and we look forward to 2016, all that’s left is for all of us at O’Hagan Home Loans and Insurance to thank you for reading our articles over the past 12 months, and we look forward to hopefully providing you with further help with all your mortgage and insurance queries in the future. With all our best wishes to you for a wonderful New Year.