The Reserve Bank of New Zealand’s latest mortgage data shows that buyer demand continues to plummet following aggressive interest rate hikes that have pushed key mortgage rates to between 5% and 6.5%:The value of mortgage commitments fell 29% in the year to May 2022, according to the RBNZ. “People taking on mortgages now are committing to having an average of 33 per cent of their income tied up in mortgage repayments for the next 25 years or longer,” [Infometrics Chief Forecaster Gareth Kiernan said]. This figure is considerably higher than the 21 per cent that prevailed through the 2000s and 2010s… The second factor related to the expected increase in the value of the property over the life of the loan. This will place additional downward pressure on house prices, which have already fallen 9.1% nationally since November 2021. After experiencing one of the world’s biggest house price booms over the pandemic, New Zealand is now facing one of the biggest price busts.
Source: Stuff June 29, 2022 19:02 UTC