had been left jealous of renters.<\/a> <\/p>\n\u201cI bought at the peak in 2021 and the house has dropped at least $200,000 easily. It\u2019s taken years to accept this is one financial mistake I\u2019ve made which won\u2019t kill me but still hurts.\u201d<\/p>\n
Some buyers talked about being stuck in townhouses and apartments longer than they intended to, because they had listened to advice that they did not need to buy a \u201cforever home\u201d first up.<\/p>\n
Davidson said his data assumed that they had not paid off much of the mortgage yet, which would be normal for a new borrower with a table loan. A large part of early repayments is interest and only a small amount goes to principal.<\/p>\n
\u201cIt can\u2019t be great for the mindset to be in negative equity, but it\u2019s not necessarily a huge problem if people keep servicing the debt, which the majority are, there are hardly any non-performing loans at present. The bank won\u2019t come knocking solely because of negative equity.\u201d<\/p>\n
Kiwibank chief economist Jarrod Kerr said it could be tough going for some people. He said he bought his first house in 2007, which then lost value and did not recover for years. There was a mental element to falling prices, he said.<\/p>\n
\u201cWith interest rates going up on top of what is being labelled a cost-of-living crisis, it\u2019s unhelpful, it really is. It\u2019s not what we should be doing right now, in my opinion.\u201d<\/p>\n
Bruce Patten, chief executive at New Zealand Financial Services Group, said negative equity was primarily a problem when people needed or wanted to move.<\/p>\n
\u201cOur recommendation to them is, sit tight for a few more years, until the market starts moving again. So far, touch wood, we haven\u2019t had a situation similar to that during the GFC, when there were lots of mortgagee sales with negative equity, leaving people with personal loans after their properties sold and nothing to show for it.<\/p>\n
\u201cThe main advice is to speak to your adviser if you are struggling. We can help negotiate interest-only payments or repayment holidays in some cases but do your best to ride this point in time out.\u201d<\/p>\n
Campbell Hastie, of Hastie Mortgages, said he advised people to keep paying their mortgages and try not to think about it. <\/p>\n
He said he would look at borrowers\u2019 equity positions when they came to refix mortgages because people who had bought with less than a 20% deposit were usually also paying a low equity premium on top of their interest rates, too.<\/p>\n
\u201cThe fact of whether your equity position is improving or not in a sense sort of doesn\u2019t matter so long as your loan is going down.<\/p>\n
\u201cThat\u2019s what a principal and interest loan is \u2026 so long as you\u2019re making your minimum commitment there as long as the bank is concerned, they are not going to squawk at you.\u201d<\/p>\n
While Kerr said falling house prices could make people more reluctant to invest, such as business people seeking borrowing secured against their home, Otago University economist Murat Ungor said the number was likely too small to make a large difference.<\/p>\n
\u201cFor those 3600 households, this is real and it is painful. Negative equity is a balance-sheet problem, not a cash-flow one, as long as they keep servicing the mortgage. The bank is not calling the loan provided they keep paying. <\/p>\n
\u201cBut it does trap people: they cannot easily sell to move for a better job, and they cannot use their home as collateral to start a business. So there will be individual stories of lost opportunity. But as a drag on national investment or the wider economy? No. This is a personal finance story, not an economic one.\u201d<\/p>\n
– RNZ<\/p>\n","protected":false},"excerpt":{"rendered":"The true number in negative equity is likely to be higher than 3600 because many bought with a…\n","protected":false},"author":2,"featured_media":588338,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[36714,1443,192,3237,20392,813,36023,2964,42,6800,5836,130,43,22213,51386,812,131,165,40,38,41,39,23331,19985],"class_list":["post-588337","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-36714","tag-about","tag-are","tag-buyers","tag-deposit","tag-edmunds","tag-firsthome","tag-half","tag-headlines","tag-homes","tag-lost","tag-more","tag-news","tag-our","tag-owe","tag-susan","tag-than","tag-their","tag-top-news","tag-top-stories","tag-topnews","tag-topstories","tag-weve","tag-worth"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/588337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=588337"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/588337\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/588338"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=588337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=588337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=588337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}