If you haven’t considered how you could make your money work for you in the current property market, due to other influential economic factors taking precedence over your financial outlook in 2020- investors are advised to take note of what are now, record low-interest rates. Having fluctuated over the past 30 years, current mortgage rates should be your ‘why’ when it comes to making your next move in the market, be it starting or expanding your property investment portfolio, now is the time.
With the Ministry of Housing and Urban Development reporting that approximately 600,000 people are currently living in rental properties, and figures forecasted to increase as expat’s return to New Zealand creating competition in the market for housing, the continual decrease in interest rates that have been trending in this direction since June 2020, create a prime opportunity for people that are considering adding to their investment property portfolio.
In April 2020, The Reserve Bank decided to remove mortgage loan-to-value ratio (LVR) restrictions for 12 months. This decision was made to ensure LVR restrictions didn’t have an undue impact on borrowers or lenders as part of the mortgage deferral scheme implemented in response to the COVID-19 pandemic and given that banks have more discretion regarding a deposit, since this development, people are securing a loan with as little as 5% down. This shift in restrictions has seen a more than a doubling of new lending to investors with a less than 30% deposit since the restriction removal, and lending to investors with less than 20%, up more than 30%.
It is equally important to note that despite this enticing opportunity it’s wise to always weigh up your risk appetite and calculate what you may receive as a return before you start property hunting, so you know how much you are willing to spend. Don’t get in over your head, be conservative, and get informed by the right people, especially if you are purchasing your first investment property. If you would like to talk with a specialist in this field, or, would like to see what investment opportunities that may be of interest to you, we would be more than happy to connect you with the right people.
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