Mortgage Adviser: “It’s A Brilliant Time For First Home Buyers To Get On The Ladder!”

Despite overwhelming negativity, mortgage adviser Neville Modlin from The Lending Team believes that it’s a brilliant time to get into the market, especially for first home buyers (FHBs). “Many are listening to the prevailing ‘noise’ around them and making the mistake of counting themselves out before even starting the conversation,” says Neville. He emphasises there’s another side to the story of the current market that needs to be told. “Often, FHB are closer to qualifying than they realise and the opportunities this market holds for them specifically are arguably the best they’ve been in years.”

The Lending Team spells out the good news…

Greater negotiating power

“This market is a perfect storm for opportunity. We’re seeing many investors needing to reduce their portfolio as their mortgage repayments are simply too high for them to maintain a positive cash flow,” says Neville.

For this reason, organised and informed buyers have greater negotiating power and are walking away with great deals. On average, properties are down 10.3% from April last year (CoreLogic House Price Index) and selling at pre-2020 prices - but as with anything, stories are more powerful than stats.

A recent FHB customer of The Lending Team purchased an Auckland property for just over $700,000, while the online valuation was $945,000. “This property was on the market for almost a year with multiple sales falling through. Our buyers saw an opportunity, put in a low offer and the vendor accepted.”

Banks ARE lending

A common misconception The Lending Team hears is that banks aren’t lending to FHBs. “This is far from true as FHBs represent the majority of business at the moment for banks,” says Neville. He adds that banks are also competing for business, with a few even offering cash contributions for low deposit customers (>80% LVR lending) - which is unheard of.

Capital gains could be greater

When buying at the bottom of the market, buyers might pay a higher interest rate in the short term, however the properties on the market, within their budget, are likely to have significantly higher CVs or ‘online’ values. “The incentive of a potential capital gain on the property over a short term is worth the temporary ‘squeeze’. You’ll be on the property ladder and have the option to refinance and re-structure your mortgage with this in mind,” says Neville.

“Don’t wait…”

“It’s important to stress this market is temporary and we’re already seeing clients go into multi offer situations. Interest rates are stabilising and The Reserve Bank is expected to adjust to Loan-to-Value restrictions in June in favour of FHB. Don’t make the mistake of waiting,” cautions Neville. “The properties within your budget now won’t stay the same, as property prices will rise due to greater buyer competition.”

His advice to buyers wondering if they should get into the market is that “It’s time to contact your mortgage adviser to assess your position and what your potential borrowing power is. Ultimately, you want to be ready when an opportunity pops up. The current conditions won’t last forever.”

(For first home buyers eager to learn more, The Lending Team has a First Home Buyers Evening planned for June 1st on the Hibiscus Coast, Aucklandand a webinar on June 2nd which you can register for FREE here.)

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