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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.

Mortgage Brokers Christchurch - Property Gazette May

Published by Scott Miller on Tuesday, May 07, 2013 in

Finally we are seeing more properties coming on the market for sale. This is great news for purchases, so much so that 11 preapproved clients of Advanced Mortgage Solutions found properties to purchase in just two days. Busy yes........happy clients, very much so!

On a personal note I completed the Graperide in 3hrs and 10mins despite me chain falling off with 30kms to go. The challenge for next year is to break the 3hr mark!

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 1 May 2013  

                                 Variable              5.55%  
                                 6 Month Fixed     4.99%
                                 1 Year Fixed        4.95%
                                 2 Year Fixed        4.99%
                                 3 Year Fixed        5.65%
                                 5 Year Fixed        5.99%

Interest Rate Outlook

The Reserve Bank (RBNZ) continues to be caught between a rock and a hard place in regarding what to do with interest rates.

The high exchange rate is pushing inflation ever lower but in Canterbury, the rebuild and rising house prices are showing potential to push domestic inflation up.  For the time being it looks like RBNZ will sit on the fence and deal with the housing issue later.
The RBNZ can’t increase the official cash rate (OCR) early for fear of exacerbating the high currency and pushing inflation even further below target. Equally, it can’t reduce the OCR or keep it unchanged forever, for fear of stoking the overvalued housing market and creating runaway inflation.
Eventually, one or the other will win out, forcing the RBNZ to climb down from its current position on the fence. We firmly believe that the rebuild and housing-induced domestic inflation will eventually prove the stronger, forcing the OCR to move upward.

Over the course of New Zealand’s history, construction booms have generated inflation pressures and rising house prices have provoked consumer spending. We believe that these themes will be repeated in the upcoming cycle – the RBNZ will have to act swiftly to keep a lid on the effect this could have.
As for the best mortgage interest rate strategy in this environment the value looks to sit in the 1 to 2 year part of the curve with 2 year rates a click under the magical 5% rate. We can’t see any value in floating when it is 0.25% to 0.50% higher than the 2 year rate. Everyone’s circumstances are different so please do talk to us before finalising any decision.   

What’s Hot

The hot part of the interest rate curve is the 2 year fixed price. Traditionally the marketing strategy that banks use to gain market share, it is again proving successful with rates under 5% currently representing great value.
Deal of the Month

This month we were able to help reduced the lender’s mortgage insurance cost from $3,200.00 to $1,600.00 for a young couple purchasing their first home. As well as the reduction we were able to add the cost of this insurance to the home loans total, enabling them to pay it off over a 30 year period. Contact us….we deliver.

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