6 Feb 2014

Banks readjusting to new lending rules

7:06 am on 6 February 2014

Auckland's largest real estate agency says January house sale figures in Auckland indicate banks are becoming more flexible towards low deposit borrowers.

Barfoot & Thompson managing director Peter Thompson says Auckland's housing market made a strong start to 2014 with the median price of the properties his firm sold reaching $580,000.

Mr Thompson says prices have eased back from the record median price of $700,000 achieved during December, but this is part of the normal seasonal trading pattern.

January's sales numbers are the highest in a January month for six years.

Mr Thompson says buyer interest wasn't restricted to the top end of the market, with 39 percent of homes which sold in January selling for less than $500,000.

He says the banks are slowly readjusting and lending to first home buyers.

Mr Thompson says a lot of the banks called back pre-approved mortgages when the Reserve Bank brought in the policy around lending to low deposit borrowers.

But he says now banks are being more cautious and only issuing pre-approved mortgages when the criteria has come forward.

"I think that's the big difference now, there's more pre-approved mortgages now out in the market place especially in the under $500,000 range."

Mr Thompson says the market is still slightly in favour of the sellers in Auckland, so long as they are pricing their house correctly otherwise it will sit there.

He says indications are the market will be extremely active during the first quarter of the year.