Darren Ludlam and his wife moved from Auckland to Christchurch a little over a year ago in the hopes that they could finally buy a home, only to lose pre-approval for a mortgage under new lending rules.
Ludlam, 56, says he is pessimistic about his chances of owning a home under the stricter rules of the CCCFA despite emerging market headwinds.
It’s been a long way for Ludlam to save a deposit. Nearly a decade ago he was diagnosed with stomach cancer, which led to his gastrectomy and several follow-up surgeries.
Most of his savings disappeared during his illness.
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The ACC settled a claim after deciding that Ludlam was permanently disabled, providing approximately five percent of the deposit, which combined with his wife’s savings and husband’s KiwiSaver savings allowed them to take out a 10 percent deposit.
Ludlam worked in banking for 20 years before falling ill, mostly in the mortgage business, which he said helped him get pre-approved from ANZ.
Then came the CCCFA, the new Reserve Bank limit on lending to anyone without a deposit at 20 percent.
Although some experts predicted 2022 would be a better year for first home buyers, with potentially lower prices and perhaps even haggling, Ludlam doesn’t believe it.
He says there may be a smaller group of buyers as a result of the CCCFA, but that those who are now excluded from getting a mortgage are the first and less affluent homebuyers, meaning those who can afford the higher prices are still competing.
Nor does he see anything that would remedy the housing shortage, or the imbalance between supply and demand that pervades the housing market.
“There are a lot of new people coming to New Zealand all the time, and a lot of these people have money to buy these homes.
Even with the specter of higher mortgage interest rates, the phasing out of the mortgage discount for investors, the potential for debt-to-income ratios, and other headwinds, Ludlam remains skeptical that things will get any easier.
“I won’t believe it until it actually happens.”
Ludlam and his wife have a two-year-old son, Harrison, who he describes as his “miracle child.”
“We had a 3 percent chance of having children,” he says.
We will continue to search [for a house]. We have a 2-year-old, and we want him to have a home to live in. We don’t want to take the rent of our lives.”
Little ray of hope
However, Ludlam says his wife has noticed more Christchurch homes selling on Trade Me as deadlines and sales, suggesting the market may be slowing and the auctions have been less successful.
“Maybe something is going on,” he says.