Mortgages easier in the upper North Island

By ANNE GIBSON

Rising house prices are not squeezing people out of the mortgage market and it is getting easier to borrow money, says a Massey University study.

The latest AMP home affordability index research done by the university shows a 2.8 per cent rise in the September quarter, indicating that people's ability to borrow to buy a house is improving.

Although the picture in seven out of 11 regions is good, Aucklanders' ability to borrow is worsening.

The survey shows a 3.8 per cent decline in home affordability in Auckland through rising prices that are outstripping interest rate changes.

But nationally, relatively cheap finance through low interest rates has improved affordability in spite of rising house prices, AMP's survey says.

The finance giant issued a warning, saying people should not commit too much money to houses.

AMP financial services managing director Ross Kent said people could be tempted to over-commit money towards a house, take out a large mortgage or many mortgages and find them difficult to service if interest rates rose.

Returns from rental properties were already beginning to slip, he said.

"Our message is don't put all your eggs in one basket, no matter how attractive it looks," Mr Kent said.

"As with any investment, people should understand their risk profile and be wary of exposing themselves to a situation where borrowings outstrip their ability to repay."

Home affordability


Rising

Wellington (up 10.3 per cent).

Taranaki (up 5.7 per cent).

Northland (up 4.8 per cent).

Waikato/Bay of Plenty/Gisborne (up 3.7 per cent).

Manawatu/Wanganui (up 3.7 per cent).

Hawkes Bay (up 2.8 per cent).

Canterbury/Westland (up 1.9 per cent).

Falling

Southland (down 7.1 per cent).

Otago (down 4.5 per cent).

Auckland (down 3.8 per cent).

Nelson/Marlborough (down 2.9 per cent).