Homeowners feeling flush after learning their newly-released property values are borrowing more from banks to splurge on new cars, boats and home renovations.
Others whose equity has jumped on the back of massive house price increases are negotiating better mortgage deals, and stand to save thousands of dollars in annual interest repayments. But experts are warning homeowners not to take the desktop council appraisals as gospel, as rateable valuations may not reflect the actual market value of properties.
Anyone feeling rich after seeing their home's paper value shoot up - many by over 40 per cent - should think carefully before piling thousands more on to their mortgage, Real Estate Institute chief executive Helen O'Sullivan warned. "Just because your house is worth more doesn't mean your cashflow has increased. I wouldn't use the increased CV as a basis for further borrowing."
Loan Market mortgage adviser Bruce Patten had fielded a surge of inquiries since Auckland's new valuations were published on Monday from clients looking to borrow more on the back of their new paper-based wealth. One had borrowed $30,000 for a new boat and another $50,000 to fund a new car and renovations on their home.
"It's amazing how people psychologically feel richer because they've got something confirming that. Putting it on paper does tend to give them that feeling of wealth."
Increased equity in their homes meant people could borrow more cash through their bank, rather than turning to high interest finance companies, Mr Patten said. However, other clients were using their new equity to negotiate better terms on existing mortgage debt.
Many homeowners could now refinance with banks on more favourable terms if their valuation pushed them over the 20 per cent equity threshold. The average Auckland first-home owner stood to save around $3000 a year by switching to a discounted three-year interest rate of 5.99 per cent, which banks were more likely to offer to lower-risk borrowers with higher equity. This would mainly benefit those on floating rates as borrowers on fixed rates would incur break fees.
New Zealand Bankers' Association chief executive Kirk Hope warned homeowners that an increase in their property's rateable value "does not in itself mean you'll be able to borrow more from your bank".
" ... banks will continue to apply normal lending criteria," Mr Hope said.
Valuation jump brings confidence to splurge on toys
Richard Harris says life is too short to focus solely on repaying his mortgage.
So the 42-year-old Flatbush operations manager drew down $45,000 from his bank last year to purchase a new boat and $30,000 this week for a new jetski.
"I've decided that my body's not going to last forever so I'm better off enjoying myself now and getting top ups on my mortgage - as long as I've paid it off before I'm 65."
Mr Harris and his partner bought their Flatbush home in 2011 for around $660,000. It had a 2011 CV of $660,000 but that jumped to $840,000 this week.
He said the growing paper value of his home made him "more comfortable" borrowing extra for discretionary items, "as long as house prices don't fall through the floor".
The boat was added on to his mortgage, while he took out a separate seven-year loan this week to pay for the jetski after learning his property had jumped in value by 27 per cent.
Once the water toys are paid off, he plans to keep pouring the same repayments back into his mortgage.
Mr Harris said despite the extra borrowing, repayments to his bank had not increased because he had extended his mortgage over a longer term.
"I was trying to pay it off over 18 years but I thought, 'What's the point' and now I've dragged my main mortgage out to 23 years."
While he agreed he could save interest fees by paying the mortgage off quicker, he said: "I may not be able to ride a jetski or go fishing when I'm 65. I'm not going to put my life on hold."
Demand not seen
Auckland Council admits it woefully underestimated the level of demand for property revaluation figures after homeowners bombarded the council's website, causing it to spectacularly crash.
But council brass say the unprecedented volume of website hits - which surged by 1000 per cent over a normal day's traffic on Monday to nearly one million - could not have been foreseen.
The council brought on extra IT staff and increased bandwidth yesterday in a bid to fix the problem.
Heavy demand also brought down the Quotable Value website yesterday as homeowners turned elsewhere for the new data.
The council page was designed inhouse by employees to deliver the three-yearly valuation updates.
Acting chief finance officer Kevin Ramsay said the problems stemmed from the sheer volume of traffic.
"A million hits was more than we anticipated."
The individual capital valuations, used to set rates bills, will be mailed to households from this week.
3 Accessing your valuation
1 Auckland Council website
2014 revaluation figures are available online. Intermittent access because of heavy user traffic. aucklandcouncil.govt.nz/EN/Pages/default.aspx.
2 QV website
Valuation data can be accessed through QV, but website crashed yesterday because of heavy demand. qv.co.nz
3 QV website
Valuation data is also available through rating objection form on QV website at the following link: ratingobjection.qv.co.nz/Views/default.htm