PHOTO: Official Cash Rate (OCR) – 0.25%
The Reserve Bank’s confirmation today that it’s holding the Official Cash Rate at 0.25% is great news for household borrowers with plenty of avenues to secure a mortgage still in existence, says a leading financier.
“While the OCR is expected to remain low for some time, the talk now is when will interest rates go up, not if. This is reinforced by some banks currently pushing very sharp rates on four and five-year terms such as 2.89% and 2.99% which are increasingly tempting for homeowners,” says Julius Capilitan, Managing Director of Century 21 Financial New Zealand.
“Don’t let commentators tell you interest rates are low but it’s impossible for many to borrow. Not true. Banks are set to really start jostling for market share, both in the commercial and residential sectors. What’s more, banks are making a big shift to accommodate first-home buyers. Hence, we are seeing more incentives such as higher cash-back amounts being offered,” he says.
While stories have been aplenty of mainstream banks making impossibly high hurdles to secure a mortgage, the entry for many borrowers remains achievable, particularly as people head to more flexible non-bank lenders, he says.
“Often first-home buyers get rejected by the big banks because they don’t quite meet the servicing requirements, or they might not have a 20% deposit. However, there remains plenty of can-do lenders who are prepared to back good people, do the running around, and secure an even lower interest rate,” says the Century 21 financier.
He says with everything getting harder when it comes to higher deposit requirements, tougher scrutiny on the self-employed, capital gains on investment properties, it’s easy for borrowers to become despondent. However there remains plenty of money to lend and while interest rates remain so low, Kiwis should act on this once in a lifetime opportunity.
Julius Capilitan says with an array of disincentives now at play for residential property investors and landlords, many ‘mum and dad’ investors are actively considering commercial property.
WE DON’T ROAST OUR BEANS UNTIL WE HAVE YOUR ORDER
“We’re seeing asset-rich loans achieved with ease. That is someone who can stump up with say half of the money or more. As long as the rent services the mortgage, then the financial assessment can be less, there’s often no barrier on age, and the commercial interest rate can be low – when dealing with the likes of retirees,” he says.
Likewise, he says, high-income loans can still be easily achieved as can construction loans when clients can leverage development projects against freehold land and other assets.
Century 21 Financial works with the big retail banks, smaller banks, credit unions, and non-bank lenders. It offers a full range of financial and mortgage broking services, with Century 21 real estate offices nationwide also referring clients for financial advice and lending.
“Century 21 Financial certainly strengthens our company’s proposition in real estate. Julius and his team are working closely with our franchises, delivering on the property ownership dream for many Kiwis,” says Derryn Mayne, Owner of Century 21 New Zealand.
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