New rule could restrict your borrowing
Debt-to-income (DTI) lending restrictions are looking like a distinct possibility; ANZ predicts they will be in place within a couple of months. What impact will this have on you? It could limit your borrowing, make it harder to buy a first home or more difficult to buy an investment property.
For investors, in particular, we don’t know how banks will treat your income. Will they include your actual rental income from last year or could they limit it to 80% as occurs when you apply for a new loan on a rental? This remains to be seen. We’ve noticed that banks occasionally still struggle to correctly apply the current restrictions – throwing DTI into the mix will almost definitely lead to widespread confusion.
As a tool for controlling the Auckland housing market, one expert is calling it “a disaster” and his reasons are compelling:
- It will make it harder for first home buyers,
- It won’t fix the underlying lack of housing supply in Auckland, and,
- It could make the supply problem worse by providing a disincentive for developers and house builders.
There’s also a strong chance this will lead to higher rents. It’s also a possibility that the restrictions will be tougher on investors (like the current LVR restrictions) in order to target them specifically.
Right now, we have a lot of questions about DTI restrictions and no answers. However, it does look as though the Reserve Bank is gearing up to target the Auckland housing market, so if you plan to buy in the SuperCity this year, you should probably get your lending sorted out sooner rather than later. However, just like the last lot of restrictions placed, we will again endeavour to review, confirm, translate and publicise what they mean in ‘real’ terms to our loyal database through our newsletters. Watch this space.
First home buyers back with avengence.
We saw more first home buyers in the first quarter of this year than in the whole of 2015 and new data is showing that’s a trend across New Zealand. ANZ saw a 188% increasein Kiwisaver first home withdrawals in the past three years, great news for home ownership rates and shows that many young Kiwis are making the effort to spend wisely and save as much as they can.
There are also changes in the pipeline that could see more people eligible for Kiwisaver withdrawal. The current income limits – $80,000 for an individual and $120,000 for a couple – will be scrapped to provide a ‘second chance’ for people who have previously owned a home. The HomeStart scheme has helped almost 12,000 people into a first home with $55.6 million in grants the last financial year.
Our team has had a fantastic success rate for first home buyers, by choosing the products that best suit each borrower and knowing how to present each loan application correctly so it meets a lender’s requirements. Match that with some hard work, sacrifices, serious saving and Kiwisaver withdrawals from young New Zealanders, and there’s no reason why you, your family, friends or colleagues can’t get a foot in the door of the housing market.
Foreign buyer figures surprise nearly everyone.
It’s becoming more difficult to place the blame for Auckland’s runaway house prices solely at the feet of Chinese investors, now LINZ statistics on foreign buyers have revealed only 4% of Auckland properties and 3% of properties across New Zealand were sold to non-residents in the first quarter. Of those non-resident buyers, around half were Chinese.
There has been plenty of debate about the data, but most people agree that it was surprisingly low – even considering the ‘dodgy data’ – with the Government estimating the real number is around 5% (I’ve certainly seen plenty of examples of New Zealand residents buying property on behalf of non-residents, but I think this would be next to impossible to prevent.) Overall, this news seems to have taken the wind out of the sails of people who want to blame international investors entirely for ramping up prices.
We know it’s not all about international buyers because the vast majority of my clients are successful local homeowners and investors who have benefitted enormously from the rising prices. Hopefully, with first home buyers managing to get their feet onto the housing ladder, that success can be emulated by the next generation too.
100% Claim success rate.
We’re extremely proud to say that every single insurance claim made by SuperCity Insurance clients has been paid out. This is a wonderful result for our clients – although nobody wants to have an insurable event occur, when it does, you want to be paid out as soon as possible so you can focus on recovery, not paying the bills.
It has been hugely satisfying to see clients get the financial support they need. For instance, two shockingly young clients have been diagnosed with cancer this year: a man in his twenties and a young mum.
Both had to put their working lives on hold while they were treated, but their payouts came through and removed their financial stresses so they could concentrate on getting well. Other clients have had injuries, surgeries and heart conditions, and each one of those clients has been able to make one call to the SuperCity Insurance team to have their claim facilitated and paid out.
One reason our claim rate is so high? We aim to make sure you are always eligible for the cover you have. We try to rule out the fine print that will get your claim rejected and match your circumstances with the right cover. There’s no guarantee, and you should always tell us when your circumstances change, but by taking a thorough, customer-focused approach to insurance we do everything we can to ensure you have the right cover that will pay out when you need it to.
With Karen Clapham now on board as full time practice manager, SuperCity Insurance has been going from strength to strength. We’ve been growing our number of clients – but not too quickly – so we can continue to offer top-quality advice and tailored cover that will maintain our fantastic claim rates.
If you would like to review any of our work together; if you have a claim you need help and support with; or if you have any questions on what you have read in this newsletter, please don’t hesitate to call me directly.
In health and happiness,
Jaime
Jaime James, Principal Insurance Advisor for SuperCity Insurance
M: 021 527 069
Contact Joel
Joel Oliver
Managing Director
Level 4, 272 Parnell Road, Parnell, Auckland 1052
PO Box 37303, Parnell, Auckland 1151
0800 INVEST I 021 884 181
www.supercitymortgages.co.nz
joel@supercitymortgages.co.nz
Text “Joel” to 215 for my contact details
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