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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.

Mortgage Brokers Christchurch - July's property Gazette

Published by Scott Miller on Saturday, July 06, 2013 in

Freezing cold Antarctic storms followed by unseasonal warm weather seems to emulate what's happening in the property market at the moment.

The pressure from the Reserve Bank around limiting the number of high loan to value ratio loans being written is taking effect. I have found less 95% deals are now getting across the line, hurting the first home buyer. Products like KiwiSaver and the First Home Subsidy (from Housing New Zealand) are going some way to help counteract this pressure.

On the other hand house prices are still trending up higher due to the lack of properties for sale on the market. There is little sign of this slowing down, however it appears 'plans' are slowly being put in place by the Government to help alleviate the situation.

As you will read below, it has never been a better time to fix your mortgage. Please contact me NOW to see what I can secure for you.


So on with what’s happened this month.   

                                     Current Interest Rates as at 05 July 2013

                                              Variable                  5.59%  
                                              6 Month Fixed        4.99%
                                              1 Year Fixed           4.95%
                                              2 Year Fixed           5.15%
                                              3 Year Fixed           5.65%
                                              4 Year Fixed           5.85%    
                                              5 Year Fixed           6.15%


Interest Rate Outlook

Is the end of low interest rates in sight? We, of course don’t know, but there are some signs that the worm might be starting to turn and let’s face it, it has to at some stage. The interest rate environment over the last few years has been one of record lows, both here and abroad. However in the USA we have seen the Federal Reserve set out a timetable for winding down its government held low interest rates. This has seen wholesale interest rates for longer term rise which generally leads to retail rates following.
 
Locally, the economy has a firmer feel and you could label it as moving from recovery to expansion. There is now a lot of ‘ticks’ in the positive side of the ledger, and momentum is becoming more self-fulfilling as a result. Despite this we do not suggest getting carried away, we still have a number of head winds such as currency exchange risks that we need to look out for.
 
Meanwhile housing supply shortages and the lowest mortgage interest rates in almost 50 years are underpinning a rising housing price market, however we are a little wary of a nationwide housing market given on going stretched household affordability. The high NZD will mean the RBNZ should shy away from raising the Official Cash Rate as long as possible. Rising residential investment activity and an additional 39,000 houses for Auckland over the next three years will eventually help reduce pressure on prices, but a nervous wait lies ahead.
 
Variable Interest rates have not changed since our last communication. However, as I have mentioned several times over the last couple of months longer term wholesale interest rates have risen sharply, pushing 2, 3, 4 & 5 year money upwards. Looking ahead, given the likelihood that rates will continue to rise, borrowers would do well to consider fixing. Selecting a term depends on how quickly you believe interest rates might rise versus one’s appetite for the extra cost. We favour a spread of terms, with an emphasis on 2 to 3 years as perhaps offering the best current value. As always please sit down with us though to discuss the option most relevant to your circumstances. I suggest this to take place sooner rather than later as rates are on the move.

What's Hot

Locking your money down! With the movement in longer term money market rates, a lot of our clients who have been on variable rates are rushing to lock their funds down at decent interest rates while they still can. If you are unsure, call us and we can talk through your options.
 

Deal of the Month

As the flow of funds starts to ease up we are finding more “2nd tier” options available at  affordable rates, and Lo-Doc products are coming back to the market - Call us we deliver!


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