NZ's residential real estate market is worth a combined $1.64 trillion. File photo. Photo: RNZ
Home loan borrowers are probably deciding now is the time to make the jump and fix for longer, says Corelogic.
It has released its latest housing chart pack, which shows that the residential real estate market is worth a combined $1.64 trillion.
Values were up 0.3 percent in the three months to February and 0.1 percent in the month,
In the 12 months to March, 82,757 homes changed hands and in February there were 31,838 listed for sale.
Corelogic chief property economist Kelvin Davidson said February had been a month in which the mortgage market "burst into life" with a "rate war" competition for three-year rates, and then two-year rates.
Westpac offered a three-year rate of 4.99 percent, then withdrew it but all major banks now offer 4.99 percent for two years.
"Certainly two- and three-year rates got pretty tasty through the February, March period," Davidson said.
The most recent Reserve Bank data showed borrowers were focusing on short-term rates and floating, but Davidson said it was likely the next update would show a change.
"It's always been on the cards that at some point this year people would go from floating or those shorter fixes back out to longer terms. Anything below 5 percent for two or three years fixed seems pretty appealing… we could be at a turning point with people keen to lock in for longer."
He said that could be particularly the case if global uncertainty persisted and pushed up the risk of higher inflation.
Fixing for longer now could help people get ahead of that and achiever some certainty, he said.
"Anything for a decent period fixed at 5 percent or less does seem appealing."
He said there was likely to be more market activity this year, both in terms of sales and people refixing their home loans.
About 71 percent of existing mortgages by value are fixed but due to refix soon, and 12 percent are floating.
That meant banks might not have to fight as hard for business, he said. "The scramble for market share we've had in the past couple of years when the markets were quiet I wouldn't think would be as pressing, but you can have a bigger pie and a bigger market share. It's hard to pick when rate wars emerge and why:"
He said the outlook was for rates not to fall as strongly as they had been. "Even though the official cash rate has further to fall, the flow-through to retail rates is likely to be less signifcant."
He said loan sizes were relatively low in compared to incomes, meaning debt-to-income (DTI) ratios were under control.
Although prices are expected to lift this year, Davidson said the market was unlikely to see an immediate switch in power from buyers to sellers.
"The stock of listings available to purchase is currently at its highest level for this time of year since at least 2018, which means buyers can still take their time to try and achieve a deal in their favour.
"For investors, lower mortgage rates will make new property purchases more affordable, which have required significant top-ups from other income sources over the past couple of years."
Davidson said 2025 was likely to bring a subdued upturn in the property market.
"We're just at the beginning of seeing the first clear signs that the downturn in property values has come to an end."
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