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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 - March

Published by Scott Miller on Tuesday, March 01, 2011 in

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.



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5 Year Fixed


   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!

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