March update | A bit of a topsy turvy month

It’s been a slightly topsy-turvy month in the world of interest rates and the broader economy.

Following some softer signalling from the RBNZ earlier this year, we saw longer-term mortgage rates begin to ease. But over the past few weeks, things have shifted again.

What’s driving interest rates right now?

A big part of the recent movement has been global uncertainty, particularly around the conflict in Iran and the impact that’s having on oil prices.

We’ve seen oil prices jump following disruptions to key infrastructure, which has flowed through into higher inflation expectations globally. As we know, when inflation expectations rise, so do wholesale interest rates, and ultimately mortgage rates.

Economists are warning this could create short-term upward pressure on inflation, even if the longer-term impact remains uncertain.

At the same time, the New Zealand economy is still in a bit of a mixed phase. Growth has been modest, with GDP increasing around 0.2% in the most recent quarter, while inflation is proving a little stickier than expected. When you layer in global factors like oil, it makes things more challenging for central banks trying to balance growth and inflation.

As one BNZ report noted recently, it’s a “very challenging mix for a central bank”, with softer growth but ongoing inflation pressure.

So… is it all bad news?

Not necessarily.

There are some encouraging signs starting to come through. Migration has picked up again, which tends to support economic activity over time. Export sectors, particularly dairy, are also holding up reasonably well, helping offset some of the pressure from higher import costs.

And importantly, the NZ economy has proven to be fairly resilient through recent shocks.

One of the more reassuring takes I read from Tony Alexander this month was that this is not a repeat of Covid. Borders remain open, people are still working, and while higher fuel costs will have an impact, the economy continues to function relatively normally.

So while things feel a bit uncertain in the short term, the underlying picture is still reasonably stable.

A trend we’re seeing more of… Home loan approvals for ‘older’ borrowers

Something that’s really stood out over the past few months is an increase in enquiries from older borrowers.

A common question we’re hearing is, “Have I left it too late to get a home loan?”

The short answer is no, but it can be a bit more nuanced.

The main challenge is usually around loan term. Many lenders prefer lending to be repaid by around age 70, which can shorten the term and push repayments higher on paper.

Where we can often help is by working with clients to present a clear and realistic exit strategy. That might involve downsizing later on, selling an investment property, or using other assets to repay debt over time.

With the right structure, lenders can sometimes be comfortable extending loan terms out much longer, which can make a meaningful difference to affordability.

We’re also seeing more interest in options like reverse mortgages later in life. They’re not right for everyone, but in the right situation they can provide flexibility where traditional lending no longer works.

The key takeaway is simple. If you’ve been told no, or you’re unsure where you stand, it’s often worth getting a second opinion. 

What we’ve been up to this month

It’s been a busy one on the ground.

I had the pleasure of attending and speaking at a number of Fletcher Living first home buyer events, which were great to be part of.

I’ve always been a big fan of what Fletcher Living does. Their developments are a strong example of housing done well, with thoughtful master planning, good design, and a real focus on building communities. They also offer a wide range of home types, catering to a broad mix of buyers, from first home buyers through to downsizers and investors.

From a lending perspective, new builds like these also come with some real advantages. Banks will often offer sharper rates for new builds, particularly for low deposit borrowers. On top of that, you’re getting a modern, low maintenance home, which lets you focus more on enjoying it and paying down the mortgage.

If you’re curious, you can check out their developments here.

Getting out of Auckland: a growing trend

I also spent some time this month with the team at Ultimate Group, who have a range of developments across Waikato and Christchurch.

With section prices continuing to stretch affordability in Auckland and Hamilton, we’re seeing more clients widen their search. Many are now looking at smaller townships where they can secure a larger section, build a modern home, and enjoy a more relaxed lifestyle, while still commuting into Auckland, Hamilton, or Tauranga.

It’s a trend that’s been building for a while now, and one that’s likely to continue as affordability remains front of mind.

If that’s something you’ve been considering, find out more here.

A few exciting things happening at Colab

We’ve got some exciting changes happening next month, which I’m really looking forward to.

I’ll share more on that soon, so keep an eye out. If you’d like to stay in the loop, feel free to follow us on Facebook, LinkedIn, and Instagram.

Final thoughts

It’s been one of those months where things feel a bit uncertain on the surface.

But when you step back, the fundamentals are still there. The economy is gradually improving, demand for housing remains, and there are still good opportunities for those who are well positioned.

As always, if you want to talk through your situation, whether that’s buying, building, refinancing, or just understanding your options, I’m always happy to help.