Hurricane Irma may have happened on the other side of the world, but its effect is predicted to reverberate all the way here, showing how events out of our control can affect what we pay for our mortgages.
It’s thought that Irma’s trail of destruction will be enough reason for the US Federal Bank to put a hold on interest rates for the rest of the year. This means our dollar is stronger against the US dollar, and NZ banks which are often dependent on foreign money for home loans may pay less in offshore funding—which is then (theoretically) passed on to borrowers with lower interest rates.
Natural disasters and extraordinary events like elections can play havoc with the lending and housing environment. Last year’s earthquake has had a long-lasting effect in Wellington. The Port has just begun operating normally, and insurance companies are continuing their new insurance freeze in the region, slightly complicating the home buying process. Existing insurance on a house is passing from the old owner to the new owners because insurance companies won’t issue any new policies. The lending approval process has also been affected with banks being more cautious around determining if any houses had earthquake damage.
Housing was a heated topic in this year’s election, and the NZ dollar rose and fell based on political polls. But the longer-term effects of a natural disaster (or an election!) don’t need to hold back your buying or selling decisions.
It's important homeowners look at their own personal reasons for selling to make a decision regarding timing. Some questions to consider are:
- Why are you selling?
- How quickly do you need to sell?
- When does your property look its best? (Some homes will look better during the summer months)
- What price are you hoping to achieve?
We also recommend that buyers:
- Do their due diligence before buying a house,
- Check it’s insurable before bidding, and
- Make allowances for any unforeseeable personal events—job losses, rate changes—when setting a budget.
Our advice is to control what you can—don’t borrow above your budget, secure insurance early—so if the unthinkable happens, you and your largest asset are protected. Give us a call today to discuss how we can put the power back into your hands.