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Mortgage Rates Drop: What It Means For 1st Home Buyers

Banks have been slowly lowering mortgage rates and it has got us all tied up in knots, but a leading mortgage broker says the message is simple–it’s all good news for first-home buyers, hopefully from here on. 

New Zealand's property market is experiencing a surge of optimism despite record-high interest rates, says Nathan Miglani of NZ Mortgages, which has helped hundreds of Kiwi-Indian clients across Auckland, Wellington and Christchurch among other towns and cities.

“All major banks have made a strategic move by reducing their long-term interest rates, offering potential homebuyers an unexpected glimmer of hope,” Miglani says.



The current market trend indicates a significant shift towards affordability, particularly for first-home buyers, he points out, adding that the reduction in long-term interest rates is an indication that short-term rates may also reduce over the next six to nine months. 

Canva Design DAF_hnawUjcNathan Miglani (second from right) and his team at NZ Mortgages.

“There are loads of discounts going around and banks are offering plenty of cashback deals, providing buyers enticing incentives. All different banks have all different rates and pricing, especially when the deposit is less than 20 per cent.

“We have a lucrative environment for those looking to make their first property investment. This move is expected to draw more prospective buyers into the market and ease the financial burden on those grappling with the impact of the recent economic downturn,” Miglani says.

Despite the prevailing high-interest rates, New Zealand's housing prices have experienced a notable correction, Miglani says, with Auckland and Wellington seeing a decrease of up to 20 per cent and Christchurch reporting a drop of 10-15 per cent in house prices from the peak of mid to late 2021.

“This correction has led to a more balanced market, making it an opportune time for first-home buyers to enter the property ladder since there are hardly any investors around.”

Miglani predicts current interest rates are likely to remain stable for the next six months. However, with retail sales on the decline, a struggling hospitality sector, and an increase in unemployment rates, there are indications interest rates may see a downward trajectory towards the end of Q3 and the beginning of Q4.

Looking ahead, Miglani forecasts a positive outlook for the housing market. Despite the current challenges, he predicts a 5 per cent increase in house prices 12 months from now, emphasising the current situation presents a unique opportunity for first-home buyers to secure their dream homes at a more affordable rate.

“It's important to note that each bank is adopting multiple policies, and interest rates vary among them. Prospective buyers are advised to carefully consider the offerings of each bank to maximise the benefits available. 

“The dynamic nature of the current market emphasises the need for potential buyers to act swiftly to take advantage of these unprecedented opportunities,” Miglani says.

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