_**Please Note:** This newsletter was originally published on 10th March 2023. While the information presented here may still be valuable, some aspects may be outdated._

If you’re looking to buy your first home this year, conditions are more favourable than they have been for some time. And now there’s another helping hand available in the form of the Kāinga Ora First Home Partner scheme. In this newsletter we run you through what’s involved in this new co-ownership offering.

We also assess the landscape for those already on the property ladder, because 2023 will see many of you re-fixing your home loans as current fixed terms expire.

This will likely be a shock to the system (and wallet) with rates, and therefore repayment amounts, significantly higher than they were at the start of your term. It’s crucial to make the right choice when you re-fix as you’ll be locked into higher rates for a while.

What’s the best strategy now, and for how long should you re-fix? We look at some of the options you have to manage this new interest rates environment.

**Kāinga Ora First Home Partner**

As property prices fall across the country, lenders and real estate agents are reporting more first home buyers entering the market. CoreLogic data shows that a quarter of properties sold now are to first home buyers, which is a new record.

With investors still hamstrung by a 40% deposit requirement, it’s a great time to get on the property ladder if you can.

But what if you still have a shortfall between your deposit, the amount a bank will lend you, and the price of the home you want to buy? In a situation like this, Kāinga Ora’s new First Home Partner scheme could be an option.

Designed specifically for first home buyers, the scheme operates as a shared (or co) ownership model, with you as the majority homeowner and Kāinga Ora as a third-party shared owner of a property.

**So how does it work?**

Kāinga Ora will contribute a certain amount towards the price of your property (up to a maximum of 25% or $200,000 – whichever is lower), giving them an equivalent ownership share.

So, if you have a 5% deposit for the house you want to buy, and a bank is willing to lend you 75%, Kāinga Ora would fund the remaining 20% of the property price (giving them a 20% ownership stake).

You then agree to pay that 20% back to them until you’re the sole homeowner.

You’ll be responsible for any costs associated with the purchase, such as legal and conveyancing fees, and you’re also in charge of all the ongoing property ownership costs including rates, insurances and maintenance.

Kāinga Ora won’t occupy your home, or tell you what to hang on the walls, but they will have some say as a shared owner. Keep in mind that you’ll need their approval for any major renovation projects as a guard against over-capitalising on the property.

See our new [guide](https://tella.co.nz/home-loans-mortgages/first-home-buyer/kiwisaver-first-home-grant) for more details on the eligibility criteria and finer details of the First Home Partner scheme.

**Need to re-fix this year?**

If you need to re-fix your home loan this year, you’re not alone.

The Reserve Bank says that between October last year and September 2023, nearly half of Kiwis’ home loan debt is due to be re-fixed.

With uncertainty around rising interest rates, inflation, and cost of living increases, here at Tella we’re seeing lots of questions from homeowners who want to know what’s the correct strategy when it comes to re-fixing their home loans.

Is it better to go for certainty by locking in for a longer term such as 5 years? Or fix for 1 year and take the risk that interest rates will be in a better place 12 months from now when you need to fix again?

The answer is that the correct strategy is always the one tailored to your individual circumstances. And takes your plans for the next few years into account.

Typically, a 1-year fixed rate is the cheapest rate option, but NZ’s big 4 banks are currently pricing their 2-year fixed rates lower than their 1-year offering.

This is partially to do with competition amongst lenders. They all want your home loan business and are trying to make it attractive for you to switch (and then stay). Longer term rates (3-5 years) are also being priced lower than the 12-month options.

However, with most economists predicting rates to ease again from the end of 2023, there may be higher risk to you in fixing for a longer term, than a shorter one.

An important question to consider, along with individual rates and terms is: how ready are you to ride out your future interest rate jump?

Although higher rates are going to hurt, the comforting news is that lenders already factored in any potential rate rises when they assessed your home loan application. Their modelling stress-tested your ability to service their loan at higher rates, and concluded it was achievable.

But on the flip-side of this, any money you had earmarked for other purchases or activities will now go toward servicing your home loan for the period of your new term.

Get ahead of the rise now. Crunch your household budget. Reduce as much discretionary spend as you can. Also try to clear any outstanding debt (particularly high-interest credit card debt) to ease the pressure on your pay packet.

Those homeowners who are currently paying off more than the required fortnightly or monthly amount to pay down their principal more quickly, could look at temporarily dropping it back to only the amount required. This would shrink the gap between their current and higher re-fixed loan repayments.

Compare the latest interest rates for over 20 lenders [here](https://tella.co.nz/home-loans-mortgages/rates), or to us now to get the best deal when re-fixing this year. Our experienced Home Loan Specialists are available on 0800 4 TELLA (0800 4 83552). They’re here to guide you through these interest rate rises and will structure the best home loan option for you.

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 Refix your interest rate with confidence

_**Please Note:** This video was originally published on 2nd September 2022. While the information presented here may still be valuable, some aspects may be outdated._

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🏡 Attention NZ Resident Visa Holders: Buying Your Dream Home is Possible! 💫

Have you been told that purchasing a home on a NZ resident visa isn't possible? We're here to dispel that myth – because you CAN make your homeownership dreams a reality!

Discover how to navigate the process and secure the house you've always wanted with our simple guide.

For personalised guidance on your home loan journey, reach out to us at hello@tella.co.nz, and our friendly team will be happy to assist you every step of the way. 📧🔑

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How to buy your dream home on a New Zealand Residence Visa

_**Please Note:** This video was originally published on 7th July 2022. While the information presented here may still be valuable, some aspects may be outdated._

Why might you want to switch your home loan provider and what should you consider when doing so? In this video Ben will walk you through all you need to know and consider when refinancing your home loan.

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Make the SWITCH to improve your banking

_**Please Note:** This video was originally published on 7th June 2022. While the information presented here may still be valuable, some aspects may be outdated._

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Before buying your first home you'll need to save for a deposit. This Tella video guide covers what you need to know before you start saving. What can you afford to spend on a home and how much the bank will lend? It covers using KiwiSaver, Kainga Ora, and loans or gifts from parents. For the first home, we always want to make our deposit go far so it's important we cover off low deposit (low equity) loans and what this means in terms of cost. Take 5 minutes to get yourself up to speed before using some of the great calculators and guides on the Tella website.

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Saving for a home loan deposit

Andrew Chambers, our Tella CEO, recalls a moment from the late 1990s during the onset of the Asian financial crisis. A senior colleague remarked, “You don’t know what recession is—you weren’t in banking in ’87!” That comment stuck with him. Now, having weathered a recession roughly every decade since, Chambers has come to a key realization: while recessions are inevitable, their causes and consequences are never the same.

Drawing on the metaphor of tectonic shifts, he describes the current downturn as a slow-moving quake—less dramatic in the headlines, but deeply disruptive beneath the surface. Here are some of his observations:

- **A Quiet but Deep Impact**: Unlike the sharp shocks of past recessions, this one has unfolded gradually. Its slow burn has made it less newsworthy, yet it has significantly eroded household financial security.

- **A New Banking Ethos**: Today’s banks have evolved into more responsible corporate citizens. The absence of widespread mortgagee sales—a hallmark of past recessions—is a testament to this shift. Chambers commends the industry for this progress.

- **Latecomers Hit Hardest**: Those who entered the property market late are bearing the brunt of the downturn, facing devaluations of 10–20% that have wiped out their equity.

- **Auckland vs. South Island**: Auckland has felt the recession more acutely, due to inflated property prices and higher job losses. In contrast, South Islanders have weathered the storm relatively well.

- **Infrastructure Neglect Exposed**: The recession has highlighted decades of underinvestment in infrastructure. Chambers urges both central and local governments to learn from this and prioritize long-term resilience.

- **Regretful Covid Spending**: Many households spent freely during the pandemic—on renovations, vehicles, and other big-ticket items. Now, those decisions are proving burdensome.

Chambers shared these insights in a brief conversation with Ryan Bridge on *Herald Now* morning TV. His reflections invite readers to consider not just the economic data, but the human and structural stories behind it. 

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Reflections on Recession: Lessons from the Long Grind

The Official Cash Rate has been reduced again (as widely expected), this time by 0.25% to 3.50%.

While some banks have already reduced their floating rates as a result of this announcement, we're watching closely to see how (and if) fixed interest rates will respond. The impact of global trade uncertainties, like Trump's tariffs, also adds a layer of complexity to where rates might head. We're also seeing movement on the swap curve: 

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_1-year swap rates: The downward trend is a key indicator of potential reductions in fixed mortgage rates._

Regardless of how interest rates settle, taking proactive steps towards your financial goals is always a smart move. Even with these wider economic shifts, you can still take charge of your financial situation. This latest OCR move is a good reminder to review your options, whether you're aiming for your first home, considering investment, or just want to ensure you have the best mortgage deal.

[Book a free, no obligations, chat](https://calendly.com/tella-advisors/chat-with-a-mortgage-expert-15min) with one of our home loan specialists today.

We’re here to guide you every step of the way.


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Reserve bank cuts OCR again

Have you noticed the buzz in the property market lately? There's a sense of change in the air, with agents reporting increased activity and developers starting projects again. This isn't just talk – it's a genuine shift, and we're seeing some interesting trends emerge. Let's delve into what's happening and how you can make the most of it.

### **Here’s what we’re seeing:**
- **Real Estate Optimism:** Agents are reporting a noticeable improvement, with increased activity and faster sales.
- **Developer Confidence:** Property developers are restarting projects after a two-year pause, signalling renewed confidence.
- **Lender Aggression:** Banks are actively competing for business, leading to a more favourable lending environment.
This combination of factors presents exciting opportunities for those looking to buy or refinance.

While we're not seeing the historically low 3% interest rates (and likely won't again), rates below 5% are significantly better than the 40-year average of 7%. Notably, over the past few months, we've seeing banks becoming more flexible with loan approvals, making it easier to get that home loan.

Looking ahead, the global landscape remains uncertain, with events like gold now above USD$3,000/ounce which is a sign of investors rushing to safety. However, within our industry, we expect:
- **Further OCR Cuts:** We align with bank economists who predict the Official Cash Rate will fall to 3-3.25% by year's end.
- **Lower Fixed Rates:** It's possible longer-term fixed interest rates (3-5 years) could drop to or below 5% by the end of the year, driven by both economic factors and banks' need to grow their portfolios.

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_2-year swap rates: The downward trend is a key indicator of potential reductions in fixed mortgage rates._


### **What This Means for You:**

**Increased Borrowing Potential:**
- The current lending environment can open doors to increased borrowing capacity, allowing you to pursue your property goals.

**Strategic Savings Opportunities:** 
- Potential further interest rate reductions present opportunities to optimise your mortgage and reduce long-term costs.

**Proactive Decision-Making:** 
- Understanding these market dynamics enables you to make informed, timely decisions to maximise your financial position.

### **Your Next Steps:**
- [Book a free chat](https://calendly.com/tella-advisors/chat-with-a-mortgage-expert-15min): Let's discuss your specific situation and develop a tailored plan. 
- **Stay Informed:** Keep an eye out for our updates as the market evolves.
We're here to guide you through these market shifts and help you capitalise on the opportunities. 

Whether you're looking to buy, refinance, or simply understand your options, we're ready to assist. We're committed to providing you with clear, actionable advice to help you achieve your homeownership and financial goals.

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Maximise your savings: Navigating today's mortgage market

It’s that time of year where our team get out to the beach, or out on the mountain biking tracks spending time with our family and friends.

We'll be soaking up the sun and recharging our batteries, but let's talk about our wins for this year.

Before we dive into holiday mode, we want to thank you for being a part of our journey. This year, we've celebrated countless homeownership victories with you.

### **Here are a few highlights:**
- **Global Homeownership:** We helped a New Zealand family based in Timor-Leste secure a home loan for an investment property in New Zealand to return back too (one day). We’ve helped clients all over the world, but Timor-Leste was the most surprising request. 
- **Age is No Barrier:** Our oldest client to be approved a home loan with a bank was a remarkable 72-year-old. 
- **The Next Generation of Homeowners:** We’ve helped many young individuals and couples into home ownership. It seems 25-years old is the average starting age for our first home buyers embarking on their property journey.
- **Rural NZ has been busy:** Timaru, Tokomaru, Taumarunui, Marton, Mangawhai, Kaiaua, Hikirangi and Renwick to name a few places, we have definitely seen more purchases this year outside the main centres. 
- **Most unlikely approval:**  It started with an email: “Its a proceeds of crime sale, and is selling as is where is by the court appointed lawyer.  It needs ‘some’ work but they are selling quite a bit below CV. All offers must be in tomorrow by 10am”. We got them approved, with 90% lending for first home buyers and they moved in a bit over a month later, ready to start the work.  

### **Let’s make 2025 your best year yet.**
Need help with your home loan? Contact us on 0800 4 TELLA (0800 4 83552) when you’re back into the swing of things or [book a free, no-obligation consultation](https://calendly.com/tella-advisors/chat-with-ben) for the New Year. We're here to help you achieve your homeownership dreams.

Wishing you a Merry Christmas and happy holiday season. Here’s hoping for a sunshine summer, plenty of BBQ’s and a time filled with laughter, love, and relaxation.  

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That's a Wrap

A new digital portal that allows people to apply for home loans via the OneRoof property website has been launched by New Zealand Media and Entertainment (NZME) and home loan provider Tella.

The portal sees OneRoof broadening its offering, meaning Kiwis can now use the real estate platform to see out their entire property journey from start to finish. Whether it’s reading all the latest real estate industry news, seamlessly search for their new home, finding out what it could be worth, or arranging home loan financing, it will now be available all under the one roof.

Chief of OneRoof, Greg Hornblow, says: “As one of the country’s leading property portals, OneRoof continues to innovate and simplify the property journey for Kiwis. The property industry is constantly evolving and we are proud to be at the forefront of innovation in this space. Since launching just a few weeks ago, we’ve seen a large number of users interacting with the calculator and completing the home loan application process.

“We’re pleased to be offering a new tool that aims to simplify the property buying process for home buyers, homeowners, and investors, providing a quality user experience and opening the door to a new era of property purchase and investment in New Zealand.

“OneRoof empowers consumers by equipping them with the right insights so they can make informed decisions. By combining our company values and goals with that of our home loan partner Tella, we believe we can positively revolutionise the property sector for Kiwis,” says Hornblow.

Tella CEO, Andrew Chambers, says: “Having a strong real estate platform as a partner was always on the cards, and over the last couple of years, it’s been a pleasure building that relationship with OneRoof. The two businesses are both market leaders in tech innovation within their segments and look forward to a successful partnership in bringing the two together for an amazing user experience.”

OneRoof Home Loans, powered by Tella, can be accessed at [OneRoof.co.nz](https://www.oneroof.co.nz/advice/home-loans).