We are now a total of two months into the level one of the COVID response, where we are practically back to normal and beginning to see how the pandemic has/will affect our lives. going against the grain of doom and gloom, we are going to look at a couple of positive news stories around the market post-lockdown.
Economists now say the Downturn in the Housing Market will be Smaller than Expected
Economists at the country’s largest bank say the fiscal support measures for the economy are doing the trick and they now see the downturn in the housing market coming later and being somewhat less severe than they earlier forecast.
ANZ chief economist Sharon Zollner, senior economist Liz Kendall and strategist David Croy said they see house prices falling by 5-10%, which is down considerably from their earlier prediction of 10% to 15%, “with a risk they could fall by even more.”
Additionally, this fall is now expected to occur a little later, with the brunt of the impact occurring at the end of this year and into next, once the labour market situation becomes clearer.
“We now assume more of an offsetting impact from policy supports. Temporary boosts to cash flow like the wage subsidy and mortgage deferment schemes will end, but house prices tend to be quite persistent, so this boost will linger. Meanwhile, low (and potentially even lower) interest rates will be with us for a while yet, especially given our expectation that QE [Quantitative Easing – money printing] will increase to $90bn at the August [Reserve Bank Monetary Policy Statement].”
ASB Moves to Single Fixed Rate Card
ASB has taken the lead in making it easier for first time buyers to get into a home, by becoming the first of the main banks in the market to have a single rate card offer.
The bank announced last week that it will be moving from having two fixed home loan rate cards for home lending to just one – a move that will put thousands of dollars back into the pockets of first home buyers with less than 20% equity.
The bank has previously offered two rate cards; special rates for customers with 20% equity and standard rates for all other customers. The move will allow all customers to access lower rates, irrespective of their equity levels.
ASB’s executive general manager for Retail Banking Craig Sims commented that the move is aimed at helping more kiwis get into their first home, while managing their financial wellbeing, “This is going to help our first home buyers in particular, as they often have lower equity, and so face higher rates. This will give them a leg up and hopefully help more New Zealanders into home ownership.”
This has followed earlier moves by ASB and other big banks in helping first time buyers – and the market – by offering record low interest rates and compassionate care options. But the move to a single rate card, removing higher rates for lower equity customers is the latest move to support home lending customers.
“The home ownership journey is an incredibly exciting one, but we know it can also be stressful for many of our customers. The move to a single rate card is going to help make it simpler and easier.”