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  This article was published on the front page of the Press on the 11^th May 2011. I was quoted from the perspective of being the owner of Advanced Mortgage Solutions, a mortgage broking company operating in Christchurch post earthquakes.

 

Real estate market split by quake

Buyers are shunning homes in eastern Christchurch as the effects of the earthquakes split the housing market.

Sales in the hardest-hit suburbs have slowed to a trickle, with so few recorded that valuation agency QV has been unable to measure trends in values.

In Sumner, Chris Milne can neither sell nor rent his undamaged beachfront apartment.

He bought the property to rent out now and retire in later, but even halving the rent drew no tenants.

The apartment is for sale, with an asking price less than its 2007 rating valuation.

Open homes have drawn a blank.

"Nobody turned up," Milne said. "People are just reluctant to live out this way.

"They seem to be worried about the portaloos, the damaged roads and the traffic jams, but it's certainly no worse here than anywhere else."

He said the Sumner real estate agents had left.

Real estate agent Tim Dunningham, of Min Sarginson, said the market around Lyttelton Harbour had "just gone dead", even as far away as Diamond Harbour and Church Bay.

"We've actually had almost no damage over here, but we are finding there are no buyers and no interest whatever. It's very frustrating," he said.

"People are rushing to buy houses in Rolleston, forgetting that's near where the first big earthquake was centred."

Melanie Swallow, of QV Valuations, said some house sales had been a knee-jerk reaction to the February quake and the initial flurry of activity was settling down.

She said buying patterns were in some cases based on perceptions of certain suburbs and not facts.

There had been "strong interest" in homes in the northwestern suburbs and in towns in the Selwyn and Waimakariri districts, as long as they were not overpriced.

There was no indication prices in any areas had fallen, Swallow said. Lack of job security had slowed the move of homeowners from first to second homes, she said.

Real Estate Institute figures show that about 80 per cent of Christchurch house sales in March were in the western half of the city.

Prices since the February quake were up compared with a year ago in North Canterbury and in Christchurch suburbs such as Bryndwr, Burnside and Riccarton.

Few sales have been recorded in the eastern and hill suburbs.

Mortgage broker Scott Miller, of Advance Mortgage Solutions, said most sales were now on the west side of town, but buyers in the hardest-hit areas were having no trouble getting loans.

"We've actually had more success getting borrowers across the line than after September, as long as there's replacement insurance."

He said lenders did not always require engineering reports.

The quakes had affected business for mortgage brokers, and he had heard of some having to find ways to supplement their income.

Christchurch's housing market has had its quietest period on record since the February quake, with homes selling at a rate of about six a day in the weeks afterwards.

 

 

Interest Rate Outlook

Current Interest Rates Rates offered are the best of standard, carded interest rates available and do not reflect any discounts your Advisor may be able to obtain for your client. Rates correct as at 01/3/11. Variable 6.10% 6 Month Fixed 5.95% 1 Year Fixed 6.19% 2 Year Fixed 6.45% 3 Year Fixed 6.85% 5 Year Fixed 7.50%

   Where do we start? After the disaster of the devastating earthquake in Christchurch last week it seems insignificant to be putting pen to paper about interest but perhaps our best lesson is learned from those most affected with Christchurch simply rolling its sleeves up and getting on with what needs to be done. Our hearts go out to all of those affected.

Just as the earthquake of 4 September disturbed economic activity for some time, so too will this one - probably with greater effect, which means the near zero growth we think occurred during the December quarter is going to be not much bettered in the first quarter of this year (if in fact there is any growth at all).

The interruption to growth is so large that we now see little chance that the Reserve Bank will feel the economy is strong enough to withstand any interest rate rises this year and it is more than likely that we will see interest rates remain flat throughout 2011. While some Economists are promoting a possible interest rate cut when the Reserve Bank meets again on March 10 we do not buy into this theory with no real immediate gain to be felt from this in the area it’s most needed - the Christchurch economy.

The reduced outlook for interest rates implies the Kiwi dollar will stay slightly lower than would otherwise have been the case, especially as inflation appears to be picking up in the UK and Europe raising the chances that interest rates will be increased in those economies this year.

The light trying to shine through the smoke & dust of the quake is the diary sector with Fonterra revising up their forecast pay-out for this season from $7.30 up to $8.00. This payout will incorporate the traditional milk solids pay-out of $7.50 plus a distributable profit range of 40-50 cents, which will boast the rural sector into spending, helping our economy to grow. The above all points to our recommended borrowing strategy changing somewhat from previous months whereby we can now see little chance of interest rate rises this year. As such we are currently recommending that taking the floating interest rate probably makes most sense both now and for the foreseeable future, additionally we note these rates are currently the cheapest on offer in the market in the very low 6% range.

What's Hot

We have seen a further loosening of credit criteria in the early part of 2011 with another two of our core lenders setting clear parameters allowing lending up to 95% LVR for owner occupied purchases. While certain criteria must be meet for applicants to qualify (such as stability of employment and minimum income levels) this is certainly a good sign and further emphasises the increasing appetite of the banks.

Deal of the Month

We had a nice deal approved last month assisting one of our referrers into an investment property with only putting 15% deposit down. To date banks have requested a minimum 20% deposit on investment properties but due to the overall strength of our client we were able to assist. - Call us we deliver!

    As you will have heard by now Christchurch has had another massive earthquake. When you include the first earthquake on September 4th 2010 it makes this the fourth major earthquake in Christchurch within 6 months.

Having been through each of these earthquakes I can honestly say that todays was the most powerful in regards to outright damage. The epicentre of today's earthquake was centred in Lyttelton (about 6kms from Christchurch), whereas the initial earthquake in Sept.'10 was centred just outside of Darfield (about 40kms from Christchurch). The other difference this time around is instead of the earthquake centre being relatively deep in its origin, today's earthquake was only 5kms below the surface.

As I write this we are continuing to be shaken by aftershocks but these are not as violent as this afternoons.

I have taken some photos of the damage sustained to our home and its surroundings. Please feel free to click the link below to be taken through to pictures on my Facebook account.

 

 

 

I would like to pass on our thoughts and best wishes to those who have been affected by the Christchurch earthquake. We would also like to offer assistance to any who require help. Please feel free to call us on 980 4541 if you think we can assist in any way.

AMS is open and operating and ready to answer any of your questions. We are expecting an influx of calls and enquiries so please be patient if we are unable to answer your enquiry straight away as we will get back to everyone.

 

 September was quite a month.

Christchurch was hit by a magnitude 7.1earthquake, Southland had the worst snow storms for decades, Wellington witnessed a head-on train crash, and the scariest thing of all.... I had my 42nd birthday. But despite these life changing events there was not a single loss of life, and in fact, it appears something good will come out of all of these events. Along with an already busy month there have been significant changes to New Zealand's lending landscape.

After a long absence it looks as though the old 'bank wars' are back. Over the last month we have seen a number of 'spring' promotions which have resulted in seeing lenders relaxing their existing lending policies and we now have the real possibility of receiving huge contributions to legals when purchasing a property.

Owner Occupied Property

New Zealand lenders are now looking at property  being purchase for home ownership (owner occupied property) to need as little as a 10% deposit (up to 90% loan to value ratio), allowing first time buyers and people looking to upgrade their existing homes an opportunity to place as little as 10% of the purchase price as a deposit. Lenders policy at this level of LVR is still a little more stringent, but when you think that as little as 10 months ago there was only 2 lenders seriously looking at 90% deals (and on a case by case basis) you can see how much change their has been in lenders thinking.

Rental Property

There has also been some relaxing around purchasing rental property. With one lender in New Zealand they will now look at lending up to 90% on standalone rental purchases - Please contact Advanced Mortgage Solutions here to find out more. This is just one example of improved lending criteria. Almost all lenders have shown improvements in their appetite for rental purchases with many now looking at 80%+ LVR's on a case by case basis.

Contributions to legals

To add more good news to the story all the mainstream lenders are now offering contributions to legal costs for people looking to purchase property up to $1,000.00, and in Christchurch as a sign of good faith this is increased to $1,500.00, to help cover structural engineering costs. In all my time as a Mortgage Broker I have never seen so many incentives given in order to attract customers.

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As always I am here to workshop deals with you. If you are looking to purchase a house for yourself or looking to purchase a rental property I firmly believe now is a very good time to buy. House prices are low and it appears we are at the bottom of another property cycle, this coupled with low interest rates and a bank war provides the perfect time to purchase property. Please also let me know if you have a home loan coming up for renewal so I can contact the bank and organise a range of discounted rates for you to choose from.


Kind regards

Scott Miller

P.s Find a number of short video's to help with better understanding bank policies, what interest rates are doing and a brief look into some of the different strategies available when looking to invest. Please click on the link below to have a look.

  In this month's edition of the AMS Gazette I would like to begin by saying thank you to all the support and well wishes I have received since the earthquake on 4th September. It was a shock to we woken up at 4.30 in the morning to what sounded like a Boeing 747 landing in my driveway while being shaken so hard I thought my fillings would fall out. Thankfully my wife Barbora who is employed by Air New Zealand was working out of Rotorua and missed the original earthquake. Maddison however, our four year old Fox Terrier has not stopped shaking and is ready pack her bags and move to another city.
As the earthquake has mainly affected the Canterbury region I am going to cover some of the things Cantabrians should consider doing in regards to their mortgages and home loans.

So what to do next if you live in Canterbury.

Many of you will have already done the right thing and contacted the EQC to lodge a claim. Don't worry if you have not already done this as the EQC have come out and said you have 3 months from the 4th September to contact them. Just remember that once you have made your claim you cannot add further damage at a later date. So make sure you have a good look around your properties, so when the assessor arrives to look around your properties you can show him/her all the earthquake damage.

Mortgage Holidays - If you feel you need a mortgage holiday contact me and I will help with organising it. I have heard directly from all the major lenders and am fully briefed on how to make an application.

NB - You do not have to have lost your job or have extensive damage to your family home to get a Mortgage Repayment Holiday, if you want one you can have one. Each lender has slight differences in the processes of applying for a repayment holiday. There are also slight differences in the available structures you can use depending on which lender you have your mortgage with. Some for example will allow your mortgages maturity date to be moved out so when you return to paying your mortgage there is no change to amount you pay, other lenders unfortunately do not have this option. Please contact Advanced Mortgage Solutions here to get assistance with your application. Alternatively feel free to call me on 980 4541.

Please be aware these facilities are only available for people who live or have property in Canterbury - outside of this region it is (as far as the banks concerned) business as usual.

News Outside of Canterbury

Interest Rates - This Thursday's Official Cash Rate announcement is expected to see interest rates remain unchanged. With recent world events, namely the speed, or the lack of speed in which the world is recovering from the recession, it is believed interest rates will not go up again this year. There is in fact a good chance of medium to long term interest rates to fall slightly - Watch this space.

House Prices - House prices around New Zealand appear to have come down a little over the last month or so. The number of houses for sale are lower than anticipated for this time of year, with commentators arguing that many people are now holding off to take advantage of the 2011 Rugby World Cup. This is a hard one to call - personally I think if we have a long warm summer we could see house prices recover and feed nicely into the World Cup frenzy. Like with interest rates above time will tell.

As I sign off I would like to wish all of those affected by last week’s earthquake the best of health and wellbeing - if I can be of any assistance please feel free to contact me.

Kind regards

Scott Miller

P.s Find a number of short video's to help with better understanding bank policies, what interest rates are doing and a brief look into some of the different strategies available when looking to invest. Please click on the link below to have a look.



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