It's becoming harder for Aucklanders to borrow money for a new house if they haven't already sold their current home.
Mortgage brokers say they have noticed banks are tightening their lending conditions - a direct result of a cooling of the hot property market where there has been a big drop in houses available for sale, and fewer homes selling at auctions.
East Auckland mortgage broker Bruce Patten said he was getting about 12 calls a week from people having trouble getting bridging finance from their banks to buy a new home before selling their old one.
"We are getting a huge amount of requests at the moment, mainly because people don't want to sell before they secure something. But with auction clearance rates starting to drop they run the risk of being left with two houses and big debts, or selling for less than expected and a much larger debt," he said.
"I think the banks think that things have peaked and that is why they are pulling back . . . The banks are more reluctant now than they have ever been to do bridging finance."
Patten said many of his clients who could not get bridging finance to buy a bigger house were deciding to extend their existing houses instead. "So it's actually feeding the shortage."
The Real Estate Institute said the volume of residential sales in Auckland last month was 20 per cent below the same month last year, and a leading auctioneer said auction clearance rates had dropped to about the same level as last October when the Reserve Bank imposed lower loan-to-value ratios (LVRs).
Stuart Wills of the Mortgage Supply Company said the banks were tightening bridging finance simply because of the scale of finance required to juggle $2 million houses at once.
"Lots of people have enough income to service one mortgage but they can't afford a mortgage of $2m or more," he said.
Average Auckland residential property values have jumped 15.9 per cent in the past year from $874,851 to $1,013,632 according to CoreLogic. But the rate of increase has slowed from a peak of 24.4 per cent in the year to last November.
John Bolton of Ponsonby-based Squirrel Mortgage Brokers said the Reserve Bank had stabilised the market by lowering LVRs for investors to 70 per cent from last November and 60 per cent from next month, and by nudging the banks to restrict lending to non-NZ residents.
"That's why you saw all the banks move at the same time [in June] in terms of not lending to non-residents, including New Zealanders abroad, and saying they can't use overseas income to service NZ-based debt," he said.
He said the market was now "stalling" and would probably stay "soft" until after the Christmas break.
Hayden Broadbelt of Elite Auctioneers, which runs auctions for several real estate firms across Auckland, said auction clearance rates had dropped to the same levels as October last year when the banks were adjusting to the first LVR tightening.
Although 72 per cent of properties in South Auckland were still selling at auctions, clearance rates were only 60 per cent in central and East Auckland and 55 per cent on the North Shore.
"The numbers of people bidding are reducing," he said.
"There are still a lot of people attending auctions, and we are seeing properties sell 24 to 48 hours afterwards, but there is actually a gulf at the moment between owners' expectations and what the [buyer] is prepared to pay."
Bankers' Association chief executive Karen Scott-Howman said recent data still showed strong credit growth.
"However, the Reserve Bank has recently tightened its loan-to-value rules and banks are already complying with the spirit of these rules."
Brokers' finance tips
. Sell your old house before you buy a new one while the market is "soft".
. Delay settlement on your new house for up to three months so you can sell your old house. Negotiate this before bidding at auction.
. Delay settlement on the house you're selling for up to three months so you can find a new house.
. Ask the new owner of your old house if you can keep renting it after settlement date until you find a new house.
. Don't bid at auction but negotiate a purchase subject to selling your old house.
. Increase the mortgage on your old house so you pay a deposit on your new house for a loan from a different bank, then rent out your old house.