Mortgage rate war fuels housing confidence
ASB Bank’s latest survey of housing confidence is likely to send shivers up spines at the Reserve Bank.
Thursday, February 10th 2005, 5:39PM
by The Landlord
For the first time since the middle of 2003, the survey shows more people think now is a good time to buy a house than not.While the housing market was undoubtedly stimulated by the price war in the mortgage market, particularly in two-year fixed-rate loans, ASB Bank chief economist Anthony Byett thinks the latest results are more than just a one-off anomoly.
"Just when it appeared that the housing cycle might have reached a peak, the market kicked away again in November and December. The cheap rates have added fuel to the fire," Byett says.
But another positive was that up to October, most people had been expecting interest rates would keep rising. Then at the end of November, the Reserve Bank signalled it was probably nearly done with raising rates this cycle. "The findings of the latest survey show that people’s perceptions about interest rates altered during this period – a change likely to have been instrumental in the lift in activity and housing confidence."
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