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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.

AMS Property Gazette - February

Published by Scott Miller on Thursday, February 10, 2011 in


 

Please find my new look Property Gazette below. As always I have tried to deliver only the relevant market and policy information to help you keep up to date. I appreciate the monthly feed back and questions that arise from each newsletter and I'm sure this will be no different.

 

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 01/2/11.

Variable            6.10%

6 Month Fixed   6.10%

1 Year Fixed      6.19%

2 Year Fixed      6.45%

3 Year Fixed      6.85%

5 Year Fixed      7.50%

 

Captain, we need more power! The New Zealand economy is currently like an overloaded Jet Plane trying to take off, we have a full load and our momentum is pushing us down the runway slowly gathering speed but we just need to lighten the load slightly by releasing some of the burdening economic constraints holding us down or consumers need to start spending more to give us the extra power to take off!

 

You can feel that it will not take much of a push to get us off the ground but where exactly will this push come from? While housing still remains subdued it is showing signs of recovering with activity continuing right up to Christmas in 2010 and we get the feel the traditional slow Kiwi start to the year has not been as sluggish as historically, the question is how long will the momentum take and will it be strong enough to lift us off the ground (where we have been for some time now)....

 

From Advanced Mortgage Solutions view point, the reality is that New Zealand & globally we have had to go through a sustained period of balance sheet recovery as consumers 'pull their heads in' and readjust to actually living within their means as opposed to the debt fuelled, false economic growth through the first 8 years of this century. This readjustment has been good for us and New Zealand has stood up to the readjustment better than most. The basket case economies of the US & Europe with particular disasters in Ireland, Spain & Portugal have not eventuated here & as subdued as we have been we are very lucky to have actually not sunken to the terrible lows felt across the aforementioned countries.

 

The back half of 2011 will be strong for us as the influx of money spent through the economy from RWC & Earthquake recovery starts to lubricate the pistons of our plane faster, perhaps lifting us off the runway! In terms of a borrowing strategy in these sluggish times we still suggest that with an expected increase in interest rates in the back half of 2011 we favour looking at the well priced 1-2 year fixed option as giving better value than a floating rate (which is sure to rise by 0.50-1% through this year).

 

The difference between floating and 1 year fixed is only 0.25% and to 2 years fixed 0.45%, as such the basic maths suggests that either of these rates offers better value than the floating rate which we believe will be sitting at around 6.95% by the year's end. However fixing past 2 years doesn't make a lot of sense as the 3 year plus rates start @ 7.10% & increase out to 7.70% long term with the price difference making them too expensive, unless of course you want to guarantee certainty for the a sustained period in which case you have to be prepared to pay a premium.

 

What's Hot

Some of the banks! The Christmas break has been kind to some of the grumpy old men who sit in senior credit positions within our banks and we are seeing a continuing trend of slowly but surely banks starting to release the shackles credit wise. This is the lubrication our economy needs and we are now getting clients set that we couldn't 12 months ago. Help your clients, refer them to us for advice.

 

Deal of the Month

With January traditionally being our slowest month of the year we didn't have anything spectacularly unusual jump out of the box but we do continue to help numerous clients finance themselves into properties with as little as 5% deposit from genuine savings. - Call us we deliver!

 

 


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