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Get the latest news and tips about mortgage finance and the property market. Scott Miller, mortgage broker from Advanced Mortgage Solutions comments on housing and lending.

Advanced Mortgage Solutions | Property Gazette - April

Published by Scott Miller on Wednesday, April 06, 2011 in

   Our recovery has literally been shaken to a standstill, with major seismic events both locally and in Japan hitting home, the focus of people is survival and recovery not economic growth.

We had started 2011 quite strongly, commodity prices (read dairy) were surging, mortgage approvals were on an upward trend breathing life into the real estate market and confidence was improving overall, not that it had yet flowed through to retailers.

However with the events of Christchurch & Japan hitting us all between the eyes our economy is taking a massive hit with an estimated $15 - $20 Billion of capital destroyed and needing to be replaced. The process of which will stimulate economic growth but having this thrust upon us by having to replace assets lost is not the sort of growth we were looking for.

Thankfully, prudent management by government has seen us in the fortunate position of a strong balance sheet with relatively low levels of debt which allows us to lean on this position to stimulate the growth that is needed.

The Reserve Bank cut interest rates by a surprising and quite whopping 0.50% which with more than half of New Zealanders on a variable rate mortgage currently will be pleasantly felt in the pockets of all of these mortgage holders immediately. Surprisingly we say because while this was described as “an insurance measure” it is still in the face of an inflation rate that sits at the maximum of government preferred scale @ 4%, albeit no doubt we need help given the size of the challenges ahead.

Recover we will though, with Rugby World Cup set to pour millions into our economy and of the course the rebuild of Christchurch set to start a huge cash-flow cycle not seen in this country for many a year.

With interest rates so low many a consumer is unsure as to what the best interest rate option is for them right now but we are leaning to sitting on the floating rate as these are the cheapest in the market in the mid 5% range and we cannot see any increase on the horizon in the immediate future, in fact we do not believe that we will see any increases until the very back quarter of 2011 and maybe not until early 2012. Why pay 6.40% now we you can enjoy mid 5%?

What's Hot
With the above reduction in interest rates, the Variable rate is certainly hot right now, with the 0.50% off rates this has equated to a saving of over $1500.00 per annum on the average mortgage, coupled with a continuing loosening of bank criteria we are seeing the first home buyer market starting to perk its eyes and ears up.

Deal of the Month
90% LVR lending is well & truly available; the trick is understanding the criteria and knowing how to package the application up so it meets the same. Last month one of our Advisers had a Referrer on his doorstep with a client who had been declined by 3 banks, we got him approved and saved not only his purchase but the 3 backed up on it - Call us we deliver!

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