Veda’s managing director John Roberts says this is evidence that first home buyers have been shopping around for mortgages so they can buy before the low-equity home lending restrictions come into force on October 1.
The data shows Gen Y inquiries for mortgages increased by a massive 51.25% in August compared with August 2012.
“We have never seen an increase in applications like this – the data is compelling evidence that first home buyers are trying to buy before the Reserve Bank restrictions effectively limit the number who can buy with a 10% deposit or less.”
Roberts believes the Reserve Bank’s high loan-to-value ratio (LVR) lending will deliver a spike in borrowing and a spike in housing sales.
“With limited supply that means prices for first homes could well increase.”
Veda’s data also hints at how people may circumvent the LVR restrictions.
Personal loan inquiries increased by a significant 23.58% in August compared with August 2012.
“It is well known that house buyers who don’t have a large enough deposit to get a mortgage from a mainstream bank will borrow the deposit from a second tier lender – like a finance company.”
“It’s early days but indications are the Reserve Bank’s high loan-to-value ratios may have limited impact on Auckland’s housing bubble.”
