Hot home deals going begging

Prospective homeowners will benefit from a battle of the banks to offer their best mortgage rates - spurred by last week's official cash rate cut to 3.5 per cent.

The 4.75 per cent drop from its 8.25 per cent peak in June last year plunges it to its lowest level ever and Reserve Bank governor Alan Bollard again urged banks to pass on lower rates to households.

The one-year mortgage rate most popular at present has fallen to around 5.7 per cent from 8.61 per cent in January last year. And the floating rate has dropped to around 6.9 per cent from 10.3 per cent last month.

Overall, mortgage rates have tumbled to their July 2003 level - a 5 year low - at the same time as property market buying conditions are boosted by a sustained drop in property values for the first time since 1998.

Quotable Value's latest report shows property values fell by 7.4 per cent last year.

Mark Dow of QV Valuations suggested prospective buyers shouldn't hold out inflated expectations of further falls: "With the significant drops in interest rates over the past three months, there has been an increase in market activity and values appear to be flattening again."

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Posted: 1 Feb 2009

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