Auckland's housing market made a red hot start to 2020, but there are fears banks are tightening their belts and buyers could find it hard to get home loans. Photo / 123rf
Auckland's housing market made a red hot start to 2020, but there are fears banks are tightening their belts and buyers could find it hard to get home loans. Photo / 123rf
Home buyers employed in sectors made jittery by the coronavirus may soon face a battle securing loans as banks minimise their financial exposure to the pandemic.
A long-term Air NZ employee this week had a loan for an investment property brought into question by their bank in what a leadingmortgage broker feared could be a sign the coronavirus was about to bite Auckland's red hot housing market.
Bruce Patten, from Loan Market mortgage advisers, said the Air NZ employee was an otherwise ideal home loan applicant, being on a good salary and having been with the airline for 25 years.
They also already owned their own home.
Yet the bank had been concerned by a recent reduction in their work hours because of the coronavirus, Patten said.
It also came as another lender this week pulled the plug on a $250,000 business loan to an adventure tourism company - despite having earlier approved it - and as restaurants found it tougher to secure loans, he said.
"Everyone is suddenly becoming risk averse, but my concern is it is a bit of a knee-jerk reaction," he said.
It comes as Auckland house prices have been on a red hot run since last spring and still show few signs of slowing down, despite the looming threat of the coronavirus.
Auckland's median sale price soared close to record levels when it hit $880,000 in February, the highest price in the city in more than four years, the latest Real Estate Institute data found.
Patten said his mortgage broking team helped customers secure $1 billion in home loans in January in a what was a record for his company, while Kris Pedersen, from Kris Pedersen Mortgages, also reported a near-record opening to the year.
Yet news of Italy being forced into a lockdown to contain its coronavirus outbreak and of major sports events being cancelled had property pundits wary of the speed at which the economic impact could hit.
Airline executives had notably taken temporary pay cuts, while a wide range of New Zealand companies had now put in place travel and salary freezes for staff.
Westpac chief economist Dominick Stephens now tipped the coronavirus to bring house prices grinding to a halt in the second quarter of the year, or even fall, as people feared for their jobs or took a wait-and-see approach on house purchases.
Yet he also tipped the virus' effects to be short-lived and for house price growth to return later in the year.
Auckland's median sale prices soared close to record levels in February, the Real Estate Institute reports. Photo / 123rf
Pedersen said he expected banks to keep a close eye on the situation and thought the self-employed might find it hardest to secure home loans, especially if they were linked to coronavirus-hit sectors of tourism, manufacturing or primary production.
However, he had yet to hear of banks rejecting regular customers as the lenders instead increased staff to cope with the huge volume of home loan applications they were receiving.
"I wouldn't say the standard application that we've got going in was being affected with coronavirus being given as the reason," he said.
"But it is hard with everything moving so fast - it could change."
