"Buyers frantic, banks tough", is the headline on a new survey out today of mortgage advisers, detailing how more people are trying to get money but the banking sector is increasingly tightening the reins.
Independent economist Tony Alexander said banks were showing more reluctance to lend and being so slow in processing applications that more people were missing out on deals.
"Buyers are scrambling to find whatever they can buy and are concerned they won't be able to afford something if they wait too long. Yet the banks are taking longer than ever to give approval - it can be two weeks or more which is causing frustrations for the buyers and advisers. People are missing out on places," Alexander said.
Banks were being particularly tough on the self-employed and those working in sectors most affected by Covid including tourism, hospitality, accommodation, entertainment and retail, he said.
"You not only now have to have proof of employment but also proof of continuing employment," he said.
Loan approval length times meant houses which are selling faster than ever were being snapped up faster than ever by those who were poised to buy.
"Vendors are now choosing not to accept bids conditional on finance because they can pick and choose - it's a vendor's market," Alexander said he had found.
Banks were applying new debt-to-income ratio lending limits, he said and focusing on existing customers, not those leaving other banks.
The Reserve Bank had already fired a shot across the bow of banks, watching closely home lending indicators which was sending the market into the risky territory, he noted.
"So, it would be unreasonable for us to expect that banks will engage in much riskier
lending unless they want early restoration of LVRs and some other slap on the wrist which
will dent their profitability," he noted.
He sends out his surveys to 15,000 people. But the adviser survey went to 238 in the mortgage and valuation sectors and he got responses from 70 people.
A net 27 per cent of advisers said more first home buyers were looking for advice but the number of landlords on the hunt is also up: last month, 24 per cent of mortgage advisers said investors sought their services but this month, that hit 34 per cent.
Landlords looking for new properties were growing in confidence since Auckland's second Covid lockdown, he said.
More homeowners are also looking to refinance, up from -6 per cent in September to 17 per cent this month.
But banks are changing their behaviour: "The banks appear to be more willing to deal with borrowers directly than through brokers for the moment," Alexander found.
Banks were also applying new lending limits, taking a much closer look at people's incomes.
One mortgage adviser said the number of days to sell an Auckland house was dropping and auctions were very popular.
"Still hellishly slow to get approvals from banks. If anything, it is the worst it has been, at least two weeks in the queue to even be looked at," that adviser complained.
But banks did not seem concerned about taking 10 to 15 working days to approve or reject applications - "no sense of urgency or priority given to broker submitted applications."
That adviser was turning away at least one new client a week due to them needing answers in less than five days: "I send them direct to the bank."
Another Auckland adviser said lenders were being "very fussy, inflexible" with the assessment.
"It is almost like the GFC days where they were just not wanting to approve anything and being very difficult," the adviser told Alexander.
Auckland houses were going for "crazy" prices and that was triggering banks to ask for more valuations, that adviser said.