That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
Home Loans in New Zealand: What You Need to Know
Fresh from a 12-day adventure in Japan, mortgage expert Khouanchai returns to discuss New Zealand's economic landscape with a focus on the housing market. We kick off with travel tales – navigating Japan's epic train systems and comparing living costs between Japan and New Zealand – before diving into the financial matters that concern Kiwi homeowners.
The Reserve Bank's recent decision to hold the Official Cash Rate at 3.25% signals their cautious approach to balancing inflation concerns with economic growth. What does this mean for your mortgage? With competitive rates still available – one-year terms at 4.85%, three-year terms at 4.99%, and special first-home buyer rates as low as 4.29% – there's room for strategic planning. We share insights on whether to fix or float your mortgage in the current climate, with an emphasis on personalised advice rather than crystal ball predictions.
Perhaps most sobering is our discussion on property value decreases, with the Lower Hutt region experiencing a staggering 20% drop. We share a personal account of facing a 14% value decline between purchase and settlement, exploring the challenges this creates for buyers without additional equity sources. The conversation highlights a reality many Kiwis face: potential settlement shortfalls that can reach hundreds of thousands of dollars.
Our conversation wraps with reflections on the human side of mortgage lending. Unlike traditional banking environments, we value building meaningful client relationships that allow us to understand families' complete financial pictures and provide guidance through life's unexpected turns. If you're navigating property purchases or refinancing in today's changing market, connect with a mortgage advisor who can help you prepare for challenges and identify opportunities amid the uncertainty.
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Hello and welcome back to that Homeland Hub. Today I am joined by my I wanted to say, favorite favorite person to chat with Anything to do with lending. Hello, kunj, hello, how are you doing?
Speaker 2:Good, good. It's been a while, hasn't?
Speaker 1:it? Yeah, because tell us where have you been and what did you do?
Speaker 2:Well, I had some leave. We went japan for what? 12 days. That was absolutely amazing. Um, I didn't think japan would be on a travel list or on my cards, um, but it actually is an amazing place to go and visit. No language barrier. Google translates got you the public. Um train system is like epic, like it's just an absolute maze when you see it. But it said, if you can navigate the japanese train system, you can do anything. So now I'm back and I think I could do anything.
Speaker 1:Yes, that's a massive win. Yeah, okay, I think we need to do an episode on cost of living between japan and new and New. Zealand and how you found it.
Speaker 2:Yeah, we could Well just having a look like rent and things like that are really cheap. House prices over there are quite cheap as well, but when we actually convert the exchange rate so say, something's $20 over in Japan, it's actually $20 here in New Zealand as well, so the exchange rate doesn't actually mean the New Zealand dollar is stronger or anything. However, we were there with our US family, so I met up with my US cousin and one that I've actually only met for the first time, so that was actually quite an amazing meetup as well. That's another story in itself, but the US dollar is actually quite strong over in Japan, so a lot of people from the United States are actually going over there for their holidays because their money is going a long way and further over there, as opposed to us in New Zealand, it's around about the same price to buy like the same sort of shoes, same t-shirts and things like that. So it's still good to go.
Speaker 1:I still think it's good hey, at least one of us had an overseas holiday this year. So far your one is coming.
Speaker 2:I can, I can feel it, I can see it. I still don't know where, but it's coming japan, japan.
Speaker 1:Yeah, I've been to japan many, many years ago and, um, I don't know, I I think I was there on the hottest week or hottest months, and I do not do heat no well yeah, well, if you go in november, december it's cold, it's like here right now so so you've got to time it Like we went what two weeks ago, and that was meant to be like 28, 27.
Speaker 2:We got hit with 35, 36. So that was super hot as well, and it was a heat wave.
Speaker 1:Oh God, got to survive. So we covered Japan and while you were away, we had a few changes in New Zealand. Yeah, or maybe no changes. I'm going to ask you about OCR. Yeah, okay, what is?
Speaker 2:OCR. So the official cash rate is currently still sitting at 3.25. So I think we had or not think, but there was a recent announcement on Wednesday this Wednesday just gone, the 9th of July, there was, you know, anticipation talks about. It probably won't change, but then some were still hopeful that it would change. So it didn't change, it did not change?
Speaker 1:It did not change. What does it mean for New Zealanders?
Speaker 2:So it just means that I guess they're just looking at the economy. It's just a little bit slow, but also inflation is still there. So they're trying to balance all that out, and there's still another one next month. So there's another one next month, which is only what? Is it four or six weeks away? So that gives them the opportunity to make some changes then as well, and just to see how the New Zealand economy is going.
Speaker 1:Sorry, it's not you, it's him. I know he's laughing. Our producer Matt is laughing.
Speaker 2:for those that are wondering if Matt doesn't cut this out and I was trying to fake it till I make it.
Speaker 1:Coinshoe did amazing. So basically, the OCR didn't go down and the interest rates are staying similar at the moment. In terms of housing, everyone was hoping for a little bit more relief, but it didn't happen. Yet there might be the talks of the next reduction, so I think the next one is coming up August yes, end of August. So let's see how that plans out. And I've just done a few episodes on people asking whether they should fix or float. So if you haven't seen that one, go back and have a look. You know whether you should fix or float. If your refix is coming up because everyone's situation is different, yeah, and sitting, if your refix is coming up because everyone's situation is different, and sitting here and wondering, you know whether the rates go down and whether you should just continue to fix every six months. Maybe a good idea, maybe no, we don't know.
Speaker 1:We don't know no one's got a crystal ball, so speak to an advisor and get your ducks on the road to make sure you are prepared for the worst and pleasantly surprised.
Speaker 2:Yeah, I think if you know splitting your loans up and then you select, you know six, one, two at least you're averaging over a course of time.
Speaker 1:Yeah, that's another strategy, exactly In itself as well. Another option.
Speaker 2:But yes, speak to an advisor.
Speaker 1:But yeah, if the cash flow is a problem and if you were hoping that the interest rates you know will go down and it will reduce some pressure on you, but the interest rates haven't really gone down, no Then it's a different story. But the good thing is like we are sitting in relatively low rates in UM In three-year rate 4.99. Yeah, one-year rate 4.85, 8.7.
Speaker 2:Yeah.
Speaker 1:You know, you can still get some really good specials there, and if you're a first-time buyer, we've still got that other special rate on the table, 4.29. So the rates are relatively okay, yeah well.
Speaker 2:I think anything under 5, you're winning. I think, like I don't think in our lifetime, touch wood we will see the 219s or the you know, and the twos. I don't think we'll see a two, unless another COVID or something happens, but I think they learned from COVID time as well that what they did wasn't really great, because it just inflated the house prices.
Speaker 1:And now, look, that brings me to the topic of the house prices right. Yeah, lower heart region, heart region 20% decrease. Wow, that's big. What are we going to do with that? Yeah, those poor people that bought the houses at the high and then now, if they need to sell because they're separating or because of whatever reasons, they're taking a big hit. Yeah, absolutely, we're talking, you know, $100,000 to $200,000 difference in their pockets.
Speaker 2:Yeah, well, I mean, like that's already affecting me personally myself, when only what? 18 months ago we brought something and we're actually finally just settling on it next week and we've actually you know, ours has dropped by. I think that was 14%. That's crazy, I think 14%, like just working it off at the top of my head. But then what do people do when that happens and they've got to?
Speaker 1:settle? Yeah, exactly that was going to be my question to you. If you got registered valuation and you have to settle and registered valuation comes back way lower than what you originally purchased a while back, yeah, what do you do? Where do you get the money from?
Speaker 2:exactly so. It's either, you know, do you have savings to back that up, and mostly 99% of the time, people probably don't have the savings at all. Um, we're just thankful that we were, and where we are, in a position where you can leverage on the other properties. Yeah, I'm able to leverage off some of my properties that I already have, but if people are not in that position, it's going to be hard for them to settle.
Speaker 1:Yeah, exactly.
Speaker 2:Exactly.
Speaker 1:So if you are listening to this and if you put an offer on a turnkey or a land and you know quite some time ago when you need to settle soon, keep a close eye on those and some of the time I mean, if you're a first-time buyer, you just have to walk away. Yeah, and you'll just have to walk away from it if you don't have any other funds to come up with.
Speaker 2:Which is absolutely heartbreaking. Yeah, to come up with which is absolutely heartbreaking. Thankfully, I haven't experienced or witnessed that in my lending career, and I wish to not, because we don't let people walk away no. I do not want to witness that because that's just absolutely heartbreaking. Because I mean, in our role we do personally get attached to our clients oh, we do. And if we see something oh my God I like attached to our clients, oh, we do.
Speaker 1:And if we see something, oh my God, I don't want to know it's funny, because I was just thinking about it yesterday that you know when we were in the bank, you and I different banks, different times, different colours, different colours of the banks but we see a lot of clients and it's in and out and you know you can't really build relationships properly. And there were still a few clients that I managed to build relationships, you know properly, and when I left they followed me. Ironically they found me, but I was thinking about it in the bank. It was really hard to build those relationships.
Speaker 1:This is here, the whole reason of what we do, why we do, is because of the relationships, absolutely. And we get to know them. We get to know their families, we get to know their children. We get to know you know the whole dynamics. So it is heartbreaking for us when things don't go to plan. Yeah yeah, awesome. Well, conch, thank you so much. This has been one of our longest episodes together. Lots to fill in, and I look forward to our next one.
