Around a quarter of mortgage brokers' customers may not have the option of taking their business to a new lender because their property is now unattractive to potential lenders, interest.co.nz's inaugural mortgage broker survey suggests.
The survey asked mortgage brokers a range of questions, with the survey taking place between the end of February and the end of March.
One of the questions asked brokers what proportion of their customers they thought could be stuck with their current lender and be unable to shift because their property is now unattractive to other lenders due to the likes of valuation risk, insurance risk and potential climate change risks.
Survey responses show on average mortgage brokers think 28% of their customers can't move lenders due to their property now being unattractive. Half of brokers responding said it would be between 10% and 40% of their customers. Across the big cities and regions, the mean in towns and rural areas was highest at 37%, and the lowest in Christchurch at 19%.
Meanwhile, survey respondents suggested 31% of their customers on average could refinance with another lender after their fixed-term loan period ends.
In terms of customers borrowing close to their limit, the survey shows on average mortgage brokers think 75% of their customers borrow close to their maximum borrowing capacity. And on average broker respondents say 53% of their customers probably can't move lenders due to their financial situation.
The survey also asked a question about the extent to which borrowing capacity has changed over the previous 12 months. Unsurprisingly, given an environment of rising interest rates, high inflation and increasing bank mortgage serviceability test rates, almost all respondents said it has reduced.
Below are a few answers to this question from survey respondents.
"25% reduction on average."
"CCCFA has made things stricter by invasive, pointless scrutiny, the legislation has taken away a 'customer commonsense' and now made it prescriptive. ..We need to go back to a commonsense affordability process, perhaps a percentage of gross income."
"Declined. Borrowing used to be approx 6x income and would be about 4.5x now."
"Massive decrease. Easily a few hundred thousand less for the average borrower."
"Reduced by 25% to 30%, depends on expenses."
"Significantly, 25% reduction for owner-occupier, 50% for investors."
Banks we asked about in the survey questions were ANZ, ASB, BNZ, Kiwibank, The Co-operative Bank, Heartland Bank, HSBC, SBS Bank, TSB and Westpac.
The survey was conducted by Curia Market Research by email and text. There were 160 respondents.
Interest.co.nz is running several stories based on the survey results.
Next: The finale; Is there anything interesting or unusual happening in the mortgage market that the survey questions haven't covered?
This analysis was first released in the Banking & Finance Daily Newsletter, a subscription newsletter for senior finance industry executives. You can subscribe here.