New Zealand has some of the most expensive residential property markets in the developed world, and this has been so for well over a decade now. Worst case of this is in the largest city in the country, but the problem was also serious in the other main centres and one or two provincial centres.
The real problem is that house building has not kept up with demand for many years now, and what houses are available for sale are being competed for by cashed-up investors and wealthy homeowners. This has caused the houses in these markets to be simply unaffordable for the vast majority of first home buyers.
The problem has been tinkered with by successive governments and the reserve bank, but the fundamental problem of too much demand for insufficient houses is still very much embedded in New Zealand. The banks and mortgage brokers Waikato have been complicit in this problem in the sense that they have aided the funding of the escalating housing market. If borrowing conditions had been much tighter over the past decade then this would have suppressed the demand somewhat and kept prices lower.
Instead the population has steadily increased, largely due to immigration enabled by compliant government policies, and house prices have continued to rise due to the shortage of houses and the ready availability of finance enabled by banks and mortgage brokers.
For mortgage brokers in Wellington this has been a very good period because as finance becomes tighter and banks requirements become more onerous then more people require a mortgage broker to help them through the minefield of an application. Worryingly the average mortgage now for the first time buyer is probably 3 times what it was 20 years ago, but the average salary in NZ is only about 50% higher, and a whole generation of new home owners are struggling under a massive amount of mortgage debt. This presents a real problem for the new government which intends to build a massive number of new affordable homes over the next 10 years. The very last thing they would want to do is to flood the market and help to drive down property prices, as this would most likely cause a large number of home owners to go into negative equity. This would be catastrophic for them and for the New Zealand economy.
Around 40% of the customers obtaining mortgages New Zealand use mortgage broker to achieve this. The remaining 60% go directly to their bank for other financier, but the banks are very happy to pay a commission to mortgage brokers Waikato because the brokers perform such a valuable service.
The reason why most people use a mortgage broker is because there’s something because process is so difficult to navigate for the average person, and they use a broker also to make absolutely certain they are getting the best deal on the market. Mortgage brokers like Jamal Smith, pictured right, almost all come from within the banking industry, and they have excellent and deep experience with how the banks operate and what their requirements are, and using this experience the brokers are in a position to prevent their clients do the banks in the best possible light.
The brokers often solve a number of problems for the banks particularly around pre screening many applicants for a mortgage, and providing professional advice to the customer on what mortgages and payments are appropriate for their particular situation. The brokers are prepared to put quite a lot of work into each customer because they are well rewarded especially in this current period of expensive houses and high mortgages. Brokers generally turn around 0.65% commission from the banks once the loan has been advanced, which floor a $200,000 mortgage translates into $1,300 for a few hours work. Most brokers will have a set of quality systems and processes which means that the actual effort they personally need to do will be minimised once they have concluded discussions with the customer.
Mortgage brokers Westland who work for a large firms more generally have a steady supply of leads coming in the door, and while this means a steady workflow and a steady income they will also be required to make high payments to the broking companies franchise owner. The work can also be somewhat repetitive, especially as the large broken firms tend to filter out any potential clients that look a bit difficult.
Independent mortgage brokers have a somewhat different situation in that they will most certainly will not have leads streaming in through the door, and instead will have to devote a large proportion of their time to find a new business. Fortunately the commission structure for the industry is generous which means that the brokers do not need to be working right of mortgages for every hour every day, and in reality they could spend 20% of their time writing mortgages and still have a very high incme.