Apr 09 Falling interest rates making property more attractive for investors

Apr 09

Residential property investors firmly believe that falling interest rates are making residential property investment more attractive.

A survey of more than 550 property investors, run by Mike Pero Mortgages and Landlords.co.nz, found falling interest rates are prompting investors to buy property, but they
are frustrated by the banks’ attitude to lending. The quarterly survey tracks how investors feel about the residential property market.

Mike Pero Mortgages Chief Executive Shaun Riley says the latest rate cut and falling interest rates has certainly helped home affordability.

“This is the perfect time to buy, both for investors and for private buyers. House prices are cheaper than they have been for a number of years and with falling interest rates, home
affordability has improved considerably over the past year.”

Over three-quarters of those surveyed (78.5%) said falling interest rates were making property investment more attractive. But a large proportion of comments made by those
surveyed said the biggest issue holding back property investors is the attitude of banks to lending.

“A large proportion of respondents felt that banks needed to loosen up their lending criteria. Currently, most banks require borrowers to have at least 20 percent equity in a deal before
they are prepared to offer finance,” says Shaun Reilly.

“The feeling amongst the investors surveyed was that banks are not assisting the recovery of the economy, are holding on tightly to their money, are restricting the cash available on
revolving credit facilities and charging unreasonable break fees,” he says.

Although house prices have come back nearly 10 percent in the past year, the survey results showed nearly 60 percent of investors believed they would continue to fall over the next six
months.

Shaun Riley says this view was reflected in the buying intentions of those surveyed.

“The survey results showed that eleven percent of property investors planned to buy another property in the next two months, while 12 percent were looking to acquire more property by
the end of September. A further 23 percent intended to purchase in the last quarter of the year. In total, nearly half of those surveyed (46%) were planning to buy again this year,” he
says.

“But I advise these investors to seek expert advice before purchasing, as there are significant variations between lenders and their rates and conditions. We will help investors
work through the options and come up with a strategy that will allow them to benefit from the falling rates or find a lender that suits their current position.”
About Landlords.co.nz:

Landlords.co.nz is s leading property investment website in New Zealand. It is run by Tarawera Publishing Ltd and the NZ Property Investor Magazine and includes information
designed specifically to assist investors.

For more information contact:
Shaun Riley
Chief Executive Officer
Mike Pero Mortgages
(09) 306 6698 or (021) 287 8727