2009.01.21 09:00:22
It seems homes are the most affordable they have been in four years but they are still unaffordable for many and tightening lending criteria by banks isn’t helping.
This is the conclusion of the December Home Loan Affordability report from financial information website www.interest.co.nz, released as banks slash mortgage rates further.
To own the median home (by house price) you will now need 59.6 per cent of the average after tax income to service the mortgage. This is down from 63.8 per cent in November.
This is the best it has been in four years.
Most lenders like to see the amount of money committed to a home loan as being less than 40% of the combined household income before tax, so this new affordabilty level should see many new kiwi’s able to own their own home.
The improvement in December was created largely by lower interest rates after the Reserve Bank reduced the OCR by 150 basis points. Most commentators expect the reserve bank to cut the OCR another 100 basis points to 4 per cent on January 29.
Tighter credit criteria and demands for higher deposits will most likely prevent a rebound in the housing market in the near future however this opens a world of opportunities for people looking to invest into real estate.
Professional Investment Services (powered by Financial Gain) as you know, is also owned by myself and this enables me to provide services for people wanting to invest in real estate using a financial planning model.
The lower interest rates also provide a fantastic opportunity for people to take stock of their current home loans and perhaps break existing fixed loans to get cheaper interest rates or lock in at some of the great low rates for longer terms. At LOANZ Limited we are able to help you establish if breaking your loan is a feasible option, visit us at www.loanzlimited.com
As the financial turmoil that has hit the world prevents others from acting, I believe it is a fantastic time to set yourself up for retirement with prudent planning and careful investing.
I also believe it is a time where a carefully planned property investment will help you achieve your long term financial goals in an easier and more efficient manner.
