However, the national result was skewed significantly by sharp rises in centralAucklandand theNorthShore. Almost all other urban areas recorded stable house prices.

The Roost Home Loan Affordability monthly reports show affordability for young working couples are still at their best levels in seven years in most parts of the country, although affordability for home buyers in centralAuckland,WellingtonandChristchurchremains difficult.

“Banks have plenty of cash to lend and are competing hard for business, particularly as the outlook for interest rates remains subdued,” said Colleen Dennehy, a spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from interest.co.nz.

Rising rents and stable house prices in most provincial centres is changing the results for investors, improving returns which are now showing substantial gains. In increasing numbers of towns, after-tax returns beat bank term deposits by a substantial margin, without considering capital gains.

Banks have held their floating and fixed mortgage rates at record lows over the last month despite some substantial falls in wholesale interest rates recently. Some bank economists have suggested floating borrowers fix their mortgages to avoid any increases over the next two years, but with those recent falling wholesale rates some institutions may be tempted to lower fixed rates to win market share.

Bank economists have generally forecast the Reserve Bank will hold rates until December 2012, but with sharply slowing economies in Europe, a slowing of growth in China, and questions about how strong the US recovery will get, it is equally likely our rates will remain low for even longer.

Affordability declined nationally in March because median house prices rose to NZ$370,000. This increased the proportion of after tax income needed to service an 80% mortgage on a median house to 53.9% in March from 51.8% in February, the Roost Home Loan Affordability report shows. 

Household affordability for first home buyers improved to 22.2% of income from 21.3% the previous month and is around its best levels since late 2004. First home buyer household affordability is measured by calculating the proportion of after tax pay needed by two young median income earners to service an 80% home loan on a first quartile priced house.

Affordability worsened somewhat in Auckland Central, NorthShore, Hamilton, Rotorua, Napier, Palmerston North, the HuttValley, Nelson and Invercargill, where house prices rose. It improved in many other areas where median prices were flat to slightly lower. See the main report for links to regional reports.

The Roost Home Loan Affordability report measures affordability nationally and regionally for individual income earners and households, taking into account median house prices, interest rates and incomes in their regions and cities.

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again.

More than 60% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 5.8%. The Home Loan Affordability reports use the floating rate.

For investors, the situation is getting noticeably better. Nationally, investor returns (not including capital gains or losses) are now running at 4.2% after tax and these compare will a 3.1% after tax return for a one year term deposit. But in a number of smaller urban areas, returns of up to 8% after tax can be achieved. In almost all centres, returns are improving. Towns such as Rotorua, Hsstings, Gisborne, Wanganui, New Plymouth, Dunedin, and Invercargill are all centres where you can get at least 5% after tax returns. Parts of the Wellington region also give this level.

The Reserve Bank of New Zealandhas again held the Official Cash Rate (OCR) at a record-low 2.5%, as expected. This is the tenth straight review where there has been no change. Governor Alan Bollard said the domestic economy is showing signs of recovery. Housing market activity continues to increase and a recovery in building activity appears to be underway especially in Christchurch. But commodity prices are falling and global growth is weak. If the exchange rate remains high, he indicated he may need to reassess the rate. But for now, he is happy for the OCR to remain at 2.5%.

What does this mean for rates?

Most economists expect mortgage rates to remain near their record lows for the foreseeable future because the OCR is unlikely to be increased until after December this year at the earliest. For a number of experts, this represents a further push back in their opinion of when a rate change is expected and some are saying it could be on hold until well into 2013.

Floating rates

Advertised floating mortgage rates have been broadly unchanged at around 5.7% for almost a year and are likely to stay that way until the OCR is increased, although borrowers can often get cheaper deals through their brokers because the banks are competing hard for business. It’s possible that banks may choose to pass on the higher interest rates because costs and margins are creeping up for their borrowing, but the Reserve Bank has said it is watching this and may use the OCR to offset any increase in floating mortgage rates. (The parent companies of our banks are pushing rates up slightly inAustraliabecause of these effects even though their official rates are expected to fall.) Expect floating rates to remain on hold until late 2012 or early 2013 at the soonest.

Fixed rates

The rate curve is flattening – the difference between long and short rates is narrowing, but at this time the effect is small. Expect it to grow. Fixed mortgage rates have been very stable in recent months, but remain at or only slightly below floating rates, making the fixed vs floating decision less than obvious. However, in the background swap rates have been falling steadily and this is opening up the opportunity for fixed rate cuts. The mortgage market remains very competitive and a move by one or two banks to cut fixed rates would not be surprising. There is a distinct possibility one and two year fixed rates could fall significantly below the variable rate – which means we may see a return on the inverted rate curve for the first time since 2008.

What does this mean for the property market?

The prospect of low rates generally for longer is encouraging many buyers to borrow and buy, particularly in Auckland and Christchurch where a shortage of undamaged and watertight buildings is putting upward pressure on house prices. If reductions come for fixed rates, it will signal renewed competition for mortgages in a two-track market because elsewhere in New Zealand there is more housing supply and less migration, and house prices are very stable or declining. The environment is very good for negotiating rates lower than the advertised rate.

If you’d like to talk through what this means for you and your mortgage, give your Roost mortgage broker a call.

The Roost Home Loan Affordability monthly reports show affordability for young working couples remains near its best levels in seven years, although affordability for home buyers in central Auckland, Wellington and Christchurch remains difficult.

“First home buyers are much more active in the market as they use their KiwiSaver nest eggs for deposits and force the banks to compete hard for their business with record low interest rates,” said Colleen Dennehy, a spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.

After three years in the scheme KiwiSavers who want to buy a first home can withdraw contributions made by themselves and their employers for a deposit. They cannot withdraw the government’s kick-start or tax credits contributed by the government.  Eligible first home borrowers can also receive a Housing NZ subsidy of up to NZ$5,000 each when they withdraw their KiwiSaver funds.

Banks have held their floating and fixed mortgage rates at record lows over the last month despite some signs of rising wholesale interest rates. Some bank economists have suggested floating borrowers fix their mortgages to avoid any increases over the next two years, but others are saying rates are unlikely to rise fast or far, making the fixed vs floating decision a tougher one.

Bank economists have forecast the Reserve Bank will hold rates until December 2012, although calmer global financial markets and signs of growth have pushed up longer term wholesale rates this month.

Affordability improved slightly nationally in February, with incomes up a touch, while the median house price for all of New Zealand was unchanged at NZ$355,000. This reduced the proportion of after tax income needed to service an 80% mortgage on a median house to 51.8% in February from 51.9% in January, the Roost Home Loan Affordability report shows.

Household affordability for first home buyers improved to 20.9% of income from 21.0% the previous month and is around its best levels since late 2004. First home buyer household affordability is measured by calculating the proportion of after tax pay needed by two young median income earners to service an 80% home loan on a first quartile priced house.

Affordability worsened somewhat in Northland, Auckland Central, North Shore, South Auckland, Wellington City, Christchurch, Queenstown, Timaru and Dunedin, where house prices rose. It improved in most other areas where median prices were flat to slightly lower. See the main report for links to regional reports.

The Roost Home Loan Affordability report measures affordability nationally and regionally for individual income earners and households, taking into account median house prices, interest rates and incomes in their regions and cities.

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again.

More than 60% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 5.8%. The Home Loan Affordability reports use the floating rate.

Affordability for households with more than one income improved slightly in February because of slightly higher incomes. This measure of a ‘standard typical household’ found the proportion of after tax income needed to service the mortgage on a median house fell to 33.9% from 34.0% in February.

This measure assumes one median male income; half a median female income aged 30-35 and a 5-year-old child that receives Working-for-Families benefits. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand in the past.

The first home buyer household measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household, while any level closer to 20% is seen as attractive and coinciding with strong demand.

The Reserve Bank of New Zealand (RBNZ) has held the Official Cash Rate (OCR) at a record-low 2.5%, as expected. Governor Alan Bollard warned he may cut the OCR if the New Zealand dollar strengthens anymore and reduces inflation pressures. The bank also reduced its forecast peak for the 90 day bill rate, implying the OCR will rise by only 80 basis points over the next three years to 3.3%. That would imply floating mortgage rates rise to just 6.5% over the next 3 years. Three year fixed mortgage rates are currently advertised around 6.1%.

What does this mean for rates?
Most economists expect floating mortgage rates will remain on hold until December, when they think the RBNZ will hike the OCR by 25 basis points. However, most economists also think the Reserve Bank is being too optimistic about inflation and they see the OCR eventually hiked by 200 basis points or more over the next two to three years. Some are saying fixing now looks more attractive than floating. That depends on their view that interest rates rise faster and higher than the Reserve Bank itself is forecasting.

Floating rates
Advertised floating mortgage rates have been broadly unchanged at around 5.7% for almost a year and are likely to stay that way until the OCR is increased, although borrowers can often get cheaper deals through their brokers because the banks are competing hard for business. There is little chance that banks may choose to pass on the higher interest rates they are paying on their foreign borrowing because they are having to compete hard for new business and their profits are high. This means most expect floating rates to remain on hold until late 2012 or early 2013 at the soonest. How high they rise when the OCR starts rising depends on how high the Reserve Bank lifts them.

Fixed rates
Fixed mortgage rates have edged lower in recent months, but remain at or only slightly below floating rates, making the fixed vs floating decision a tough one. Fixed rates depend more on wholesale interest rate moves rather than the OCR. An easing of the turmoil in Europe in the last month and some hopes for a recovery here pushed up New Zealand wholesale interest rates in late February by around 50 basis points, but they have stalled at those levels and have not been passed on in the form of higher fixed mortgage rates.

What does this mean for the property market?
The prospect of lower interest rates for longer is encouraging many first home buyers to borrow and buy, particularly in Auckland and Christchurch where a shortage of undamaged and watertight buildings is putting upward pressure on house prices. Elsewhere in New Zealand, where there is more housing supply and less migration, house prices are subdued.

If you’d like to talk through what this means for you and your mortgage, give your Roost mortgage broker a call.

The Roost Home Loan Affordability monthly reports show affordability for young working couples remains near its best levels in seven years, although affordability for home buyers in central Auckland, Wellington and Christchurch remains difficult.

“First home buyers are increasingly using their KiwiSaver nest eggs for deposits and banks are competing hard to lend up to 95% to help them get into the market,” said Rhonda Maxwell, a spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.

After three years in the scheme KiwiSavers who want to buy a first home can withdraw contributions made by themselves and their employers for a deposit. They cannot withdraw the government’s kick-start or tax credits contributed by the government.  Eligible first home borrowers can also receive a Housing NZ subsidy of up to NZ$5,000 each when they withdraw their KiwiSaver funds.

Some banks further trimmed some of their longer term fixed mortgage rates in early February to nearer floating rate levels, but many new borrowers are still choosing to float in the expectation that interest rates will stay lower for longer and could even fall again if economic conditions worsen.

Bank economists have forecast the Reserve Bank will hold rates until late 2012, although calmer global financial markets have in recent weeks begun to push up longer term wholesale rates, causing some to consider fixing.

Affordability improved slightly nationally in January, with incomes up a smidgen while the median house prices was unchanged at NZ$355,000. This reduced the proportion of after tax income needed to service an 80% mortgage on a median house to 51.9% in January from 52% in December, the Roost Home Loan Affordability report shows.

Household affordability for first home buyers improved to 21.0% of income from 21.5% the previous month and is around its best levels since late 2004. First home buyer household affordability is measured by calculating the proportion of after tax pay needed by two young median income earners to service an 80% home loan on a first quartile priced house.

Affordability worsened somewhat in Northland, Whangarei, Kapiti Coast and South Auckland, where house prices rose. It improved in most other areas where median prices were flat to slightly lower. See the main report for links to regional reports.

The Roost Home Loan Affordability report measures affordability nationally and regionally for individual income earners and households, taking into account median house prices, interest rates and incomes in their regions and cities.

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again.

More than 60% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 5.8%. The Home Loan Affordability reports use the floating rate.

Affordability for households with more than one income improved slightly in January because of slightly higher incomes. This measure of a ‘standard typical household’ found the proportion of after tax income needed to service the mortgage on a median house fell to 33.95% from 34.0% in December.

This measure assumes one median male income; half a median female income aged 30-35 and a 5-year-old child that receives Working-for-Families benefits. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand in the past.

The first home buyer household measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household, while any level closer to 20% is seen as attractive and coinciding with strong demand.

Affordability for young couples who both have jobs is near its best levels in seven years because of record low interest rates and rising incomes, although affordability for home buyers in central Auckland, Wellington and Christchurch remains difficult.

“There has been a surge of interest from first home buyers in recent months because of the low interest rate outlook and because many are now able to start withdrawing their KiwiSaver money,” said Rhonda Maxwell, spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.

After three years in the scheme KiwiSavers who want to buy a first home can withdraw contributions made by themselves and their employers for a deposit. They cannot withdraw the government’s kick-start or tax credits contributed by the government.

Many first home buyers reached their 3 year anniversary in late 2011 and banks are competing hard for these home buyers, often lending up to 95% of the value of the home and waiving loan fees to win business from rivals.

“Mortgage brokers and advisers are in the best position to get the best deal from any banks and either to advise borrowers directly on using their KiwiSaver contributions, or refer them to an authorized fianancial adviser,” said Maxwell.

Comments from the Reserve Bank over the last month and the darkening outlook for the global economy have further flattened the interest rate outlook. Most economists now see the Official Cash Rate on hold here until late this year or early next year.

Some banks even trimmed their fixed mortgage rates in early January as wholesale interest rates fell, making the fixed vs floating decision even tougher for borrowers.

Affordability improved nationally, with prices lower in central and South Auckland, and in central Christchurch. The median house price fell to NZ$355,000, which reduced the proportion of after tax income needed to service an 80% mortgage on a median house to 52.0% in December  from 53.8% in November, the Roost Home Loan Affordability report shows.

Household affordability for first home buyers improved to 21.5% of income from 22.1% the previous month and is around its best levels since late 2004. First home buyer household affordability is measured by calculating the proportion of after tax pay from two young median income earners required to service an 80% home loan on a first quartile priced house.

Affordability worsened somewhat in North Shore, West Auckland, Hamilton and Tauranga, where prices rose. See the main report for links to regional reports.

The Roost Home Loan Affordability report measures affordability nationally and regionally for individual income earners and households, taking into account median house prices, interest rates and incomes in their regions and cities.

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again.

More than 60% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 5.8%. The Home Loan Affordability reports use the floating rate.

Affordability for households with more than one income improved in December because of the fall in median house prices. This measure of a ‘standard typical household’ found the proportion of after tax income needed to service the mortgage on a median house fell to 34.0% from 35.2% in November.

This measure assumes one median male income; half a median female income aged 30-35 and a 5-year-old child that receives Working-for-Families benefits. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand in the past.

The first home buyer household measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household, while any level closer to 20% is seen as attractive and coinciding with strong demand.

The Reserve Bank of New Zealand has held the Official Cash Rate (OCR) at a record-low 2.5%, as expected. Governor Alan Bollard said the global economy remained fragile and growth in New Zealand was modest. He said inflation pressures were reassuringly under control and it remained “prudent” to hold the OCR at 2.5%.

What does this mean for rates?

Most economists expect mortgage rates to remain near their record lows for the foreseeable future because the OCR is unlikely to be increased until after September this year. Some even think the key rate could be cut if the financial crisis in Europe worsens markedly. Most expect the OCR to be hold until September at the earliest and some are saying it could be on hold until well into 2013.

Floating rates

Advertised floating mortgage rates have been broadly unchanged at around 5.7% for almost a year and are likely to stay that way until the OCR is increased, although borrowers can often get cheaper deals through their brokers because the banks are competing hard for business. There is the remote chance that banks may choose to pass on the higher interest rates they are starting to have to pay on their foreign borrowing, but the Reserve Bank has said it is watching this and may use the OCR to offset any increase in floating mortgage rates. This means most expect floating rates to remain on hold until late 2012 or early 2013 at the soonest.

Fixed rates

Fixed mortgage rates have edged lower in recent months, but remain at or only slightly below floating rates, making the fixed vs floating decision a tougher one. Fixed rates depend more on wholesale interest rate moves rather than the OCR. Despite all the turmoil in Europe, New Zealand wholesale interest rates have been flat to falling in recent months because of subdued inflation and economic growth.

What does this mean for the property market?

The prospect of lower interest rates for longer is encouraging many first home buyers to borrow and buy, particularly in Auckland and Christchurch where a shortage of undamaged and watertight buildings is putting upward pressure on house prices. Elsewhere in New Zealand, where there is more housing supply and less migration, house prices are subdued.

If you’d like to talk through what this means for you and your mortgage, give your Roost mortgage broker a call.

However, low interest rates and the prospect they will stay lower for longer is boosting demand for home loans and helping to keep affordability at near its best levels since 2004.

Fixed and floating mortgage rates were steady at record lows in November and most economists now expect the Reserve Bank to hold the Official Cash Rate at 2.5% until late next year given the economic uncertainty generated by the European financial crisis.

“Home buying activity has improved along with the weather and the outlook for continued low interest rates,” said Rhonda Maxwell, spokeswoman for mortgage broking group Roost Home Loans.

“First home buyers are more confident about interest rates staying lower for longer and can see banks are competing hard for their business,” Maxwell said.

Affordability deteriorated nationally, with higher prices in Northland, North Shore, Central Auckland, South Auckland, Wellington, Christchurch and Dunedin. The median house price rose to NZ$367,500, which increased the proportion of after tax income needed to service an 80% mortgage on a median house to 53.8% in November from 52.6% in October, the Roost Home Loan Affordability report shows.

Affordability worsened dramatically in central Auckland because of a sharp rise in the median price.

A young couple earning the median wage could afford to buy a first quartile priced house in November, with 22.1% of their disposable income required to service an 80% mortgage. This is up from 21.1% in October and just above its best levels since August 2004.

The Roost Home Loan Affordability report measures affordability nationally and regionally for individual income earners and households, taking into account median house prices, interest rates and incomes in their regions and cities.

Affordability has generally been improving since December 2009 as house prices have flattened out and interest rates have fallen, although there has been some deterioration in recent months as house prices have firmed again.

More than 50% of home owners are now on floating mortgages and most new borrowers are choosing to float, given advertised floating rates at around 5.75% are cheaper than average longer term fixed rates at around 6.2%. The Home Loan Affordability reports use the floating rate.

Affordability for households with more than one income deteriorated in November because of the rise in median house prices. This measure of a ‘standard typical household’ found the proportion of after tax income needed to service the mortgage on a median house rose to 35.2% from 34.5% in October.

This measure assumes one median male income; half a median female income aged 30-35 and a 5-year-old child that receives Working-for-Families benefits. Any level over 40% is considered unaffordable for a household, whereas any level closer to 30% has coincided with increased buyer demand in the past.

The first homebuyer household measure assumes a first home buyer household includes a median male income and a median female income aged 25-29 with no children. Any level over 30% is considered unaffordable in the longer term for such a household, while any level closer to 20% is seen as attractive and coinciding with strong demand.

Governor Alan Bollard has warned the European financial crisis has worsened the economic outlook and reduced the pressure on inflation, leaving him more room to hold the OCR at what were once ‘emergency’ record lows for some time.

The Reserve Bank (RBNZ) also lowered its forecast track for the 90 day bill rate, which is a wholesale interest rate that usually sits about 0.2% above the OCR. The bank now sees it rising through the second half of 2012 and into 2013 to around 4%, which implies a peak for the OCR at around 3.75% by the end of 2013.

However, most economists expect the RBNZ to hold the OCR through until the end of 2012 and say there is an increased risk of a cut in the OCR if the European financial crisis deepens.

The Reserve Bank also commented that the international funding costs for banks was increasing and may cause them to pass on those costs in the form of higher mortgage rates.
Bollard said he would not necessarily cut the OCR to offset any increase in retail mortgage rates, but he said it would be something the RBNZ would take into account.

All this means the outlook for interest rates is they stay lower for longer, although there is a slight risk they may rise a little even if the OCR is held steady.

Floating mortgage rates are advertised at around 5.7%, which makes them cheaper than most fixed rates.

My view is that interest rates will stay lower for longer and may even be cut if the European financial crisis worsens significantly, which is possible given the political and financial pressures building inside Europe’s banking system.

That would make floating a better bet than fixing, but this depends on your interest rate view and your personal circumstances.

Assemble a natural cleaning kit – most of these ingredients can be found in your local supermarket.

In the living room

Furniture polish: Use olive oil for unvarnished or unpainted furniture. Spread lightly and dry with clean cloth. For varnished or lacquered wood, mix 2 tablespoons of olive oil with 1 tablespoon of white vinegar and 1 litre of water in a spray bottle. Spray lightly and dry with a clean cloth.

Carpet cleaner: Sprinkle baking soda on carpet before vacuuming to deodorise. To remove stains, make a spray from 1/4 cup of borax and 2 cups of water. Spray on and wipe off with a damp sponge. Alternatively, immediately rub with soda water, or sprinkle salt or corn flour on the stain and vacuum after 30 minutes.

In the bathroom

Bowl cleaner: Make a paste from borax and lemon juice for cleaning toilet bowls.

All-purpose cleaner: Clean tiles, sinks, toilets and baths with baking soda, using a damp cloth.

Grout & mildew cleaner: Dip an old toothbrush in vinegar and scrub the tile grout to remove mildew and mould and prevent new growth.

In the kitchen

Dishwashing detergent: Use pure soap to wash dishes and add white vinegar to the rinse water to give glasses extra shine.

Oven cleaner: Dissolve 3 tablespoons of washing soda in 1 litre of warm water. Spray on, wait 20 minutes and clean. For tough stains, scrub with steel wool and baking soda.

Pot cleaner: To remove burnt-on food, cover the burnt area with water, add two teaspoons of baking soda and bring to the boil. Leave to cool and scrape off.