In the ever-evolving landscape of New Zealand’s mortgage market, investors are always presented with a unique set of opportunities and challenges. We don’t expect 2024 will be any different, and while many people are still enjoying the last bit of their holiday, others are busy getting stuck into the property market. We’re already seeing quite a bit of activity.

Mortgage interest rates always tend to be one of the primary factors that concern property investors and homeowners (both would-be and existing). However, while there is certainly a downward expectation for interest rates, there are three things you will do well to pay attention to:

1. Bank Affordability Criteria

If you haven’t had a review of your situation for quite some time, some bank criteria have gotten a bit easier in the latter half of 2023. The main changes we’ve seen impacting an individual’s ability to borrow money are as follows:

  1. CCCFA – many banks have taken a far more common-sense approach to this and are no longer checking how many coffees you have per week in order to assess your ability to borrow money for a home. They understand that discretionary expenses will be adjusted when the borrower takes on a new commitment like a mortgage.
  2. Rental Income Scaling – some banks have taken a more aggressive view towards rental income scaling – for example, ANZ moving from considering only 75% of gross rental income for existing rental properties to 88%. The change reflects the government’s intention to bring back interest-deductibility to existing investment properties.

Each situation is different, but it’s worth checking if you can now borrow more than you could last time you checked.

2. Navigating the New LVR Landscape

Changes in June 2023 to Loan-to-Value Ratio...