The latest CoreLogic Housing Chart Pack reveals that in January, only 10 per cent of new borrowers nationwide chose fixed terms longer than 12 months, with 90 per cent opting for floating or short-term fixed rates between 6-12 months.
CoreLogic NZ Chief Property Economist Kelvin Davidson said this trend could soon change as the Reserve Bank of New Zealand (RBNZ) continues its cutting cycle.
“Around 71 per cent of NZ’s existing mortgages by value are currently fixed but due to reprice onto a new mortgage rate soon, and another 12 per cent is floating,” Mr Davidson said.
“Over the past two to three years, these repricing events have generally meant a higher mortgage rate for borrowers.”
The situation has now reversed, with lower interest rates becoming available following the RBNZ’s rate cuts.
This shift is expected to benefit both new and existing borrowers in the coming months.
Market turnover levels and property values are predicted to continue trending higher as more borrowers take advantage of the improved lending conditions.
The CoreLogic Home Value Index recorded a 0.3 per cent rise in February, with Christchurch and Dunedin both increasing by 0.6 per cent, and even the previously weak Wellington area seeing a mild 0.1 per cent lift.
Despite these positive signs, Mr Davidson said that buyers still maintain an advantage in the current market environment.
“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,” he said.
For property investors, the changing mortgage landscape presents new opportunities after a challenging period.
“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,” Mr Davidson said.
The rental market continues to favour tenants, with high rental listings and easing net migration from previous peaks.
Gross rental yields now stand at 3.9 per cent, the highest level since mid-2015.
New Zealand’s residential real estate market is currently valued at a combined $1.64 trillion, with total sales count over the 12 months to March reaching 82,757.
Looking ahead, Mr Davidson predicts a moderate improvement in the property market throughout 2025.
“We’re just at the beginning of seeing the first clear signs that the downturn in property values has come to an end,” he said.
“Nationally, property values could rise further by around 5 per cent this year.”
