mortgage brokers christchurch

Talk to us for FREE Personal Mortgage & Home Loan Advice

0508-466-356

Mortgage Advice Blog

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 - May

Published by Scott Miller on Monday, May 02, 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 are correct as at 02/5/11.

Variable

5.40%

6 Month Fixed

5.59%

1 Year Fixed

5.55%

2 Year Fixed

6.20%

3 Year Fixed

6.70%

5 Year Fixed

7.45%

These current interest rates sure are nice & cosy, keeping our wallets warm as temperatures start to drop across the country. The Reserve bank last week threw another log on the fire by keeping the official cash rate at its record low of 2.50% allowing the above attractive variable interest rate to remain in place, not only was the rate held but governor Alan Bollard's comments lead most economists to believe that there will be no increase until late this year, if at all and possibly not until the first quarter of 2012.

Of course this all depends on how well and quickly the economy rebounds and it will, as we are coming off historic lows in many sectors. It is this area where caution should be exercised and clients need to remain alert because once the recovery gains momentum we could see interest rates moving quite quickly.

The housing market is already starting to show signs of life with the engine of the Kiwi economy, Auckland, gaining some good momentum through March & April, albeit off the trough of late last year, as this increased activity gathers speed we do believe that property sale numbers will continue to rise & spread across most parts of the country.

The second area of concern for the Reserve Bank will be inflation which is being held in check by consumers continued reluctance to spend on anything other than essential items and it is these items that we have little control over in terms of cost. If inflation were to be measured solely on the essential items such as petrol, electricity, rates & food it would be deemed to be well & truly above the 3% threshold government has set as being manageable.

As such when the housing momentum takes hold and consumer confidence increases resulting in more spending on non essential items we believe inflation will come under pressure, it is at this point in time the Reserve Bank will act swiftly and this could result in a series of Interest rate increases starting sometime in the 4th quarter of this year and continuing through the first half of 2012, accordingly, we do share a word of warning for consumers to keep their eyes & ears open as to interest rate movements because when they start they may continue for 3 or 4 consecutive reviews.

This of course brings us to a recommended borrowing strategy, while the variable interest rate is clearly the cheapest rate on offer and should continue to be so for the baulk of the rest of 2011 be on your toes and prepared to lock in at the first sign of movements, even locking in @ low 6% rates for 18 months or 2 years now could look a very attractive option come early 2012. There is no escaping the fact that if you want certainty in your interest rates you will have to pay a small premium for the peace of mind.

What's Hot

The banks continue to ever so slowly but surely open their credit window wider, just last week we had a main stream bank increase their loan to value ratio for owner occupied property owners back out to 95% which is even available on refinance proposals.

Deal of the Month

A client came to us last month requesting we refinance his investment property loan as he was struggling to maintain the payments. It wasn't the mortgage that was causing this it was his consumer debt, we consolidated his mortgage, car loan & 2 hire purchases which reduced his monthly commitments by over $500.00 - Call us we deliver!


Contact us to get free personal mortgage and home loan advice








Captcha Image

For discounted interest rates on existing loans

100% New Zealand
SBS BankSovereignTowerWestpacAIAAMPANZAsteronASBAvanti Finance
Liberty FinanceThe National BankPartners LifePublic TrustDBR Property FinanceFidelity LifeGeneral FinanceOnePathBetter Mortgage ManagementThe Co-operative Bank