First home buyers benefiting

Sustained low interest rates have prompted a surge in southern first-home buyers during the past year, up by between 20% and 40% respectively for Otago and Southland, Kiwibank says.

The bank's chief executive, Steven Jurkovich, was in Dunedin yesterday on a mission to to visit all branches within his first year's tenure, which coincided with the recent opening of the stand-alone branch in Moray Pl.

He said for Otago first-home buyers, Kiwibank's lending had risen from 14% to 17% during the past year and in Southland, from 16% to 24%.

"It's the affordability and low interest rates. New homeowners have decided now's the time to jump in," he said.

The Reserve Bank hinted heavily last week the already record low 1.75% official cash rate was now more likely to be cut than raised, while economists predicted possibly two rate cuts this year.

"That's given them [borrowers] some confidence rates will stay low for some time," Mr Jurkovich said.

Kiwibank recently put out a special rate of 3.99% for a two-year mortgage, and a lenders' price war was now beginning.

Southern property prices remain steadily on the rise. Otago is up 13.8% on a year ago and Southland is up 20.8%, making it more difficult for first-home buyers to keep pace with the required minimum deposit.

Mr Jurkovich said new home buyers were "skewed" more to borrowing to build branded-home houses, as opposed to existing homes.

"There's more certainty in what they're getting, for the banks and the borrowers," he said.

On the question of much-needed, and expensive infrastructure funding issues in the South, including Queenstown, Dunedin and Invercargill, Mr Jurkovich hopes the increasing growth of KiwiSaver funds will spill over in infrastructure funding in the future.