Blog

       Another busy month has gone by and we are only a month and a half away from entering a new year. October saw interest rates remain unchanged by the Reserve Bank Official Cash rate announcement in the last week of the month. This was widely tipped to happen so no real surprises there. We did however get a bit of a surprise in the unemployment figures which dropped by .5%. This is a good result and has been accompanied by many of green arrow stories, with the one acceptation being the Kiwi fruit PSA canker disease.

New Zealand lenders have continued to relax their lending criteria’s around owner occupied purchases. This is great news for first home buyers or people looking to upgrade or down size their existing homes. What is a little disappointing is these improvements have not flowed through to their rental and property investment policies yet, with most lenders still wanting a 20% deposit for standalone rental property purchasers. This of course can be circumvented by using your own home as security bringing the required deposit down to 10%.

Interest Rate Outlook

I believe there is now a light at the end of the tunnel and I’m pretty sure it is not an oncoming train. While economic conditions currently remain subdued, there is a lot that points toward a strong recovery in 2011.

While we are in a period of reasonably flat growth at the moment, many of the important variables required to stimulate market activity are lining up. Firstly, interest rate have stabilised and is giving the market some confidence, for the first time in over two years we are now seeing banks loosen their lending criteria and return with an appetite to lend new money.

With money well priced and the banks keen to again lend I can see that 2011 will provide the right environment for further recovery as the property market looks to rebound from the depressed period of the past two years. Overall households have focussed on clearing debt during this period and many will see the above conditions as ideal to release some of their frustration and take advantage of their improved overall position to move back into property investment, particularly as lenders relax their lending criteria around investment property.

The Reserve Bank has given every indication that interest rates will be held at their current low levels for the immediate future and I do not expect to see any increases in the OCR until March or April 2011. Given current rates have stabilised, it makes choosing the best interest rate option a little more tricky, variable rates are stable and the difference between variable and mid -term fixed rates such as 2 years are around 0.45% with variable rates the cheaper. This makes it a 50/50 call on what decisions is best to take, with people often finding the answer by aligning their personal circumstances with the best interest rate structure available.

  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.



* Please note that at this time this service is only available from landlines.

This publication has been provided for general information only. Although every effort has been made to ensure this publication is accurate the contents should not be relied upon or used as a basis for entering into any products described in this publication.

Recently there has been a large increase in new and existing clients asking for assistance with their home loans and mortgages. With this in mind and to help further assist to our clients outside of Christchurch, Advanced Mortgage Solutions is pleased to announce the introduction of a toll free number.

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 01/8/10. Variable 5.85% 6 Month Fixed 6.00% 1 Year Fixed 6.35% 2 Year Fixed 6.89% 3 Year Fixed 7.15% 5 Year Fixed 7.65%

New Zealand is actually making the slow and steady recovery we needed The problem is that media tends to focus on and highlight the negatives that continue to come out, whether it be the small interests rate increases we have expected (published as 'hikes' - far more dramatic!) Or the sluggish real estate market when in fact these factors are normal in a slow, bumpy recovery which looks and feels more like small waves in a bathtub than the negative sentiment the media promotes.

Yes we did get a 0.25% increase in the Official Cash Rate late in July but that was well and truly expected, guess what we will get another two to three similar moves before the end of the year, but remember the world economy was in such 'free fall' eighteen months ago that drastic measures were required and taken to protect us all from a depression like environment whereby rates were slashed to historic lows.

As such the next two or three increases do little other than restore us to a more 'normal' interest rate environment which is required to ensure that we don't return to a debt fueled recovery. Amazingly, we have yet to see the bank's react with an increase to their variable rates by passing on the 0.25% increase but as sure as the sun follows the moon you can expect that to land within the week.

This economic recovery is not about the housing market jumping back out of it's skin, it is being driven by slow, sustainable manufacturing growth, increased productivity and a reduction in household debt.

We continue to be restricted by a lack of available credit with banks remaining extremely conservative, in a bizarre sort of way this actually drives our business as more consumers who historically thought their bank was their friend have found out they are not so friendly and won't lend them the money they want to buy their new house, as such they find themselves at our door with far more options and our clients are constantly amazed that we can turn a bank 'no' into another bank 'yes'.

So, we get you the money, then the question becomes should I fix my interest rate or float? This is certainly a tough question in the current environment but with the difference between the floating rate and the 2 year fixed rate now looking at around 1% we do see more value n the mid- term rates of 2 year and suggest that this is a pretty safe place form many of our clients which may look pretty attractive in one year's time.

If you have a home loan coming up for renewal or just want some help with a loan please contact me by email here or get my contact details from here.


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.



* Please note that at this time this service is only available from landlines.

This publication has been provided for general information only. Although every effort has been made to ensure this publication is accurate the contents should not be relied upon or used as a basis for entering into any products described in this publication.