Here we go
|Falling mortgage rates have grabbed headlines recently with some fixed-term mortgage rates near the historic lows of 2016. Looking forward, the housing market will get a boost, albeit a temporary one. Indeed, October housing market data suggests this may already be in train. The RBNZ should be fairly comfortable with this and will be contemplating loosening LVR restrictions further. This could be announced as soon as the November Financial Stability Report, and will offer further support to house prices.
Fixed mortgage rates fell over the last few months on the back of lower wholesale rates following the Reserve Bank's more dovish tone. Competition amongst banks has pushed some fixed-term mortgage rates even lower this week in some cases to record lows.
Since August we have been predicting that lower mortgage rates would provide a temporary fillip to the housing market. Now signs of a bit more life in the housing market are coming through. October REINZ data showed a 9.3% jump in house sales in the month, leaving sales up 15.5% on a year ago. In reality, the true lift is likely to be even larger. REINZ house sales data tends to be revised upward over time, as sales data continues to trickle in from real estate agents after the data is first released.
In addition to this lift in sales, there was a drop in the average number of days taken to sell a house. This fell from 38.2 to 37.2 (seasonally adjusted), taking this measure to its lowest level since May. This adds further weight to our view that activity in the housing market has perked up.
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