According to the sale price for Auckland property in the lowest price bracket has fallen from $680,000 to $670,500 and has stayed there for three months straight. Cue, first home buyers getting excited…

No, it’s not a huge drop but it’s significant because that threshold was set in 2017 and until very recently was holding firm.

It’s also significant because the drop is broad based. It’s true across all districts in Auckland, and it’s true in about half of areas outside of Auckland too. 

Interest rates have fallen a lot since 2017 too with two-year fixed rates currently sitting at 3.79%. That’s more or less a 1% drop over the last 2 years, and that’s obviously good for affordability.

But it’s not all beer and skittles for first home buyers, though.

First time buyers tend to have less than 20% deposit (especially in the Auckland market). Consequently they have to pay more for the privilege of being granted a mortgage, but it’s still bloody cheap money, and this isn’t much of a handbrake on its own.

The real problem is getting your hands on a mortgage in the first place.

I’ve said it before, but banks are still stress testing your ability to make repayments based on an interest rate in the high 6% to mid 7% range. 

Payments on a $500,000 mortgage over 30 years at 3.79% are actually $2326/month, but the bank will need you to prove you can afford about $3530/month on top of your normal living costs and any other debt you might be carrying. That’s a fairly high bar.

The screws have also slowly tightened on a range of lending criteria too, all in the name of ‘responsible lending’ (which I do support, but jeez, sometimes it feels like we’re trying our hardest to get in the way of helping people).

Taken together I think the environment for first time buyers has improved. But only marginally.

  • It’s still hard to convince the banks to lend to you
  • You might not need 20% deposit, but even 10% is still chunky, especially in Auckland. $67K on the lower quartile houses, and damn near a $100K on the average priced ones. That’s no small change.
  • And you still need a decent amount of cash dropping in your bank in the form of pay, to prove you can service the loan

With the average Auckland mortgage for first home buyers hitting $600,000, you’ll still need all the grunt you can get to make home ownership a reality.

Where are you at in your thinking? Get in touch any time to talk through what’s possible for you. 

About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

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