Buyers are being warned to be cautious despite some banks dropping interest rates below three per cent for the first time.
Many economists are warning house prices could fall by up to 10 per cent as the economic impact of Covid-19 is felt in New Zealand.
Kiwibank, quickly followed suit by ASB, have dropped their 12-month interest rates to just below three per cent.
“From a borrower point of view, they'll need to make sure they have a buffer if house prices do fall,” ASB economist Nick Tuffley said.
“They're going to take time to make sure that firstly they've got a job, secondly is it one income or two incomes,” Peter Thompson of Barfoot & Thompson said.
The official cash rates sits at a quarter of a percent and will stay that way for some time but low rates won't last forever.
“When we do get to that point of seeing interest rate increases they are going to be very gradual,” Mr Tuffley said.
While low rates are good for those looking for a new mortgage, those in financial strife are still flocking to their banks for help.
Over 53,000 customers have reduced their loan repayments, worth $18 billion, and another 52,000 deferred their loans, totalling over $19 billion.
The Reserve Bank will release its latest financial update the day before the budget.
It's undertaken a huge quantitative easing programme - buying up Government bonds - and it's widely expected to increase that from $30 billion to around 50 or 60 billion.
“That huge bazooka of bond purchases has been really affected in keeping interest rates down,” Mr Tuffley said.
While low interest rates are good for buyers including Kelly Armitage.
“I don't want to go overboard just because interest rates have come down, i want to be sensible. but also just in terms of my financial situation,” she said.
“I'm self-employed although it hasn't affected too much so far, that there still could be flow on effects.”
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