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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.

Advanced Mortgage Solutions - Property Gazette - July

Published by Scott Miller on Monday, July 04, 2011 in



Current Interest Rates as at 1 July 2011 

 
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%
 

Interest Rate Outlook

You can’t help but think that we might actually be our own worst enemies in slowing the economic recovery. There are so many variables that indicate we are set for strong growth but they have been this way for a while now.

We have a market shortage of quality properties on the market, those that hit the market well priced are snapped up and market rents are rising which will surely start to push people toward buying. We also have a whole new wave of potential buyers hitting market as KiwiSaver matures to a point that allows consumers to withdraw their and their employer’s contributions, as well as qualifying for the government first home buyer’s grant of $1,000.00 per year for every year you have been in the scheme.


So what is holding us back? Confidence or more to the point a lack of it, as a nation we are still sitting on our hands, afraid to spend, afraid to take a step and it is this lack of activity together with a net outflow in terms of migration that is holding our economy back. We just need a little more activity and demand and the market can get some momentum which it sorely needs.


Mortgage approvals are up just over 10% on 2010 so this is a good indicator and as soon as the rural sector actually starts spending their 2nd consecutive record pay-out as opposed to focussing solely on reducing debt the quicker the economic recovery will kick in.

In relation to our recommended borrowing strategy we hold a similar view to last month, we have no doubt that we will see rate increases in the last quarter of this year and as such feel that the shorter term fixed rates probably offer the best value as there is little differential between variable and 1 year or 18 month fixed rates. For those a little more risk adverse we suggest the 2 year rate still offers good value at less than 1% above current variable rates, as long as you realise you pay a small premium now to buy some security.        

 
What’s Hot

KiwiSaver, it has now reached the stage where consumers who have been in their Kiwi Saver for 3 years can withdraw their and their employers contributions together with a first home buyers grant from the government puts many of these people in a position to buy their first home.
 
Deal of the Month

Last month we helped a couple with 3 teenage kids restore control to their finances, things had got out of control over the past few years with them racking up 2 credit cards and 2 personal loans, we refinanced it all into one, saving them $500.00 per month - Call us we deliver!

Advanced Mortgage Solutions - Property Gazette - June

Published by Scott Miller on Friday, June 03, 2011 in

    

Please find June's Property Gazette below. As always I have made comment on relevant market and policy informtion 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.

I would also like to take this opportunity to welcome all those clients who have joined the AMS team from Carolyn Dreaver's ODL Mortgages. Carolyn has decided to leave the mortgage industry and we wish her all the best of luck with her future business ventures.
 

Current Interest Rates as at 1 June 2011  

 

Variable              5.40%
6 Month Fixed         5.59%
1 Year Fixed          5.55%
2 Year Fixed          6.20%
3 Year Fixed          6.70%
4 Year fixed          7.30%
5 Year Fixed          7.45%

 
Interest Rate Outlook

You can be excused for missing the release of the biggest ‘no news’ budget in recent history, it just sort of came and went with very little fanfare and the underlying message continued that we have to keep our spending to a minimum both as consumers and from a government perspective with all focus rightly looking forward to the rebuild of Christchurch.

A tight budget means that fiscal policy will keep growth in check for the year ahead which will take some pressure off the Reserve Bank in terms of how high they would need to push interest rates, which is of course a good thing.

House sales figures continued to lift through April & May from their late 2010 trough however still remain around a third below historical averages. Encouragingly though building consents are on the rise with a new motivation arising to ‘get it done now’ before construction sector shortages emerge across the country use to the Christchurch rebuild. This increased activity together with a second successive yearly record payout on the dairy sector should start to give the economy a nice little boost, the reality is farmers will have to start spending or be faced with a sizeable tax bill & we all know how much cockies like paying tax!

All of the above is leading to a pretty positive outlook with confidence quite high in business and investment sectors, this if course leads us to our current recommended borrowing strategy.

With more than 2% variance between long term fixed rates of 5 years it is difficult to see value in longer term rates. However, we have no doubt that we will see rate increases in the last quarter of this year and as such feel that the shorter term fixed rates probably offer the best value as there is little differential between variable and 1 year or 18 month fixed rates. For those a little more risk adverse we suggest the 2 year rate still offers good value @ less than 1% above current variable rates, as long as you realise you pay a small premium now to buy some security.        
 
What’s Hot

Competition really is a beautiful thing and now the Banks credit appetite has returned they are returning to their old tricks of sweetheart deals on interest rates and professional fee contributions. We are seeing some very sharp pricing now as the banks compete for our clients.
 
Deal of the Month

Last month we funded a gentleman into his first home, he had enquired about using Kiwi Saver as deposit on his home and was very pleasantly surprised to learn that not only could he use his contributions but his employers and qualify for a government subsidy, totalling $20,000.00 he could put toward his first home making it all achievable - Call us we deliver!

Scott Miller - Quoted in the Press Newspaper

Published by Scott Miller on Wednesday, May 11, 2011 in
  This article was published on the front page of the Press on the 11th May 2011. I was quoted from the perspective of being the owner of Advanced Mortgage Solutions, a mortgage broking company operating in Christchurch post earthquakes.

 

Real estate market split by quake

Buyers are shunning homes in eastern Christchurch as the effects of the earthquakes split the housing market.

Sales in the hardest-hit suburbs have slowed to a trickle, with so few recorded that valuation agency QV has been unable to measure trends in values.

In Sumner, Chris Milne can neither sell nor rent his undamaged beachfront apartment.

He bought the property to rent out now and retire in later, but even halving the rent drew no tenants.

The apartment is for sale, with an asking price less than its 2007 rating valuation.

Open homes have drawn a blank.

"Nobody turned up," Milne said. "People are just reluctant to live out this way.

"They seem to be worried about the portaloos, the damaged roads and the traffic jams, but it's certainly no worse here than anywhere else."

He said the Sumner real estate agents had left.

Real estate agent Tim Dunningham, of Min Sarginson, said the market around Lyttelton Harbour had "just gone dead", even as far away as Diamond Harbour and Church Bay.

"We've actually had almost no damage over here, but we are finding there are no buyers and no interest whatever. It's very frustrating," he said.

"People are rushing to buy houses in Rolleston, forgetting that's near where the first big earthquake was centred."

Melanie Swallow, of QV Valuations, said some house sales had been a knee-jerk reaction to the February quake and the initial flurry of activity was settling down.

She said buying patterns were in some cases based on perceptions of certain suburbs and not facts.

There had been "strong interest" in homes in the northwestern suburbs and in towns in the Selwyn and Waimakariri districts, as long as they were not overpriced.

There was no indication prices in any areas had fallen, Swallow said. Lack of job security had slowed the move of homeowners from first to second homes, she said.

Real Estate Institute figures show that about 80 per cent of Christchurch house sales in March were in the western half of the city.

Prices since the February quake were up compared with a year ago in North Canterbury and in Christchurch suburbs such as Bryndwr, Burnside and Riccarton.

Few sales have been recorded in the eastern and hill suburbs.

Mortgage broker Scott Miller, of Advance Mortgage Solutions, said most sales were now on the west side of town, but buyers in the hardest-hit areas were having no trouble getting loans.

"We've actually had more success getting borrowers across the line than after September, as long as there's replacement insurance."

He said lenders did not always require engineering reports.

The quakes had affected business for mortgage brokers, and he had heard of some having to find ways to supplement their income.

Christchurch's housing market has had its quietest period on record since the February quake, with homes selling at a rate of about six a day in the weeks afterwards.

 

 

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!

Interviewed by 'The Mortgage Magazine'

Published by Scott Miller on Wednesday, April 27, 2011 in



How did you get started?


How did working in the industry come about?

 

I was a property investor freshly back from spending 12 years in the UK. I didn’t really want to go back to the type of employment I was doing when I left New Zealand so I started looking around at my options. I spent about a year looking around before settling on joining a relatively new mortgage broking company called Investor Finance. They were new to New Zealand after establishing themselves in Australia and promoted the idea of getting into the company at the grass root level. Well let’s say things turned out a little different to how I imagined things would go.


How long have you been a broker? What were you before?

 

I have been a broker since November 2006. Other employment include - Hospitality Management, Sales Representative, Head of Logistical services.


Has it always been a passion?

 

I have always had an understanding of figures and a passion for property, so when the opportunity to become a mortgage broker became available I jumped at the chance.

 

Why mortgage broking?


What is it about broking you love/are passionate about?

 

Finding the solutions to people’s needs and requirements, it’s fair to say that no two applications are ever the same. First home buyers are always a challenge, however at the same time are often the most rewarding. In one regard first home buyers require the most ‘hand holding’ through the buying process, but the smile on their faces once the finance has been approved and they have confirmed and then purchased their first home is priceless. Seasoned investors are great to deal with as well because the loans they require generally have a degree of depth and difficulty that is not as evident with first home buyers, however you rarely get the same excitement factor from experienced property investors as often it is simply part and parcel of what they do for a living.

 

How did you learn the business and educate yourself?

Do you have a mentor?

I follow a number of big names in the mortgage broking industry, both in New Zealand and overseas, however I don’t have a personal mentor as such.

Was it self-teaching, did you study?

I was lucky in the fact when I first started to learn my craft I was part of a team of experience mortgage brokers. I was able to ask for their assistance and benefit from their experience. This not only helped me get my early applications across the line but allowed me to pick up valuable experience in a very short period of time.  I passed the ‘Mortgage Essentials’ exams with 98.5% which was the highest grade achieved by anyone sitting the exam up to that time. The study and passing of the exams necessary to become a mortgage broker must have worked as in my first year at Investor Finance I was rewarded by winning three awards, namely - Mortgage strategist of the year, highest number of settlements for the year, and  highest lead generation of the year.

Best and worst times in the business?

 

Both Answers to this question revolve around the GFC. The best times were within the first couple of years of becoming a broker. Times back then were good, property investment was the ‘thing’ to do, and there was plenty of business and most of it came to you – great times. Then when things began to turn, nobody really expected the downturn to be so dramatic. At the same time the first company I worked at and cut my teeth at left New Zealand shores to concentrate on their Australian arm. This meant starting my own business from scratch – new logos, stationery, website, office’s and all the other requirements for starting and running your own business. Work was harder to find and I found myself speaking at all sorts of seminars and meetings. I would sometimes find myself talking to a group of investors at a seminar in Auckland one day and doing the same in Queenstown later the same week. Times have changed again and being at the coal face of property finance I can confidently say we are now through the worst. Bigger deals are coming through on a regular basis, lenders policies have relaxed, and interest rates have remained low for an extended period of time.

 

 

Best and worst business moves you’ve made?

 


The best business move I made was going out on my own and starting Advanced Mortgage Solutions at a time when the mortgage broking market was being battered by the GFC. I learned a lot about myself, not the least of which was that I had the skills to survive during a time of turmoil. It was important to me that I could prove I did not need the assistance from an established company to operate in hard times.

 


The worst moves?

I haven’t really made any yet.


Best and worst advice you’ve received?

Best advice

Keep an up-to-date CRM and regularly contact your clients.

Worst advice  

When learning I was told to follow a script when talking to the clients in meetings and over the phone – this was the worst piece of advice I was given as the resulting conversation did not sound like me and it most certainly did not sound natural – Find your owe spiel and sound natural.

Biggest challenge now?

Regulation is bringing a lot of changes to the industry. Up skilling, particularly in the time frames allowed has been challenging. However there has been a positive side effect to regulation as it has been good in weeding out the part-time brokers, or people within related industries ‘having a go’ at completing a mortgage application as they now have to prove their competency within the new regulatory framework set out by the Commerce Commission.

 

Would you do it all again?

 

Absolutely, despite the hard times I still loving mortgage broking.

 

Best business book?

It’s not really a business book, but more relates to money and how money works. ‘ The richest man in Babylon’ by George Samuel Clason is entertaining and the principles are sound.

Is there a typical working day?

 

I spend most of my days completing tasks in the following order - Answering emails, submitting applications, and meeting existing and new clients wishing to apply for finance. I find the hours in a day can whip past if don’t have some structure.

Top tip?

 

Keep your CRM up to date and work the hell out of it. Join social networking groups like Linked In, Facebook, Twitter, and YouTube.

Who is the individual that has most inspired you in business?

Richard Branson – his life, books, and achievements are inspiring.

What is your biggest long-term business goal?

 

To grow AMS into a bigger brand that operates throughout of the main centers in New Zealand. I am pleased to say that this plan is already gathering momentum with a new mortgage broker about to start at the Christchurch office and I have had an expression of interest from a broker in Auckland who is looking at operating under the AMS business model.

How are you preparing for regulation of financial advisers this year and how will this affect your business?

As I mentioned above regulation has brought its own challenges. I have my final exams to sit in March which will bring me up to the standard required by the new regulations. I think that one of the biggest challenges moving forward will be finding and recruiting brokers who have met and attained the required regulatory standard. Of course people looking to becoming a mortgage broker will find it a lot tougher because of regulation than it was even a year ago.

 

Advanced Mortgage Solutions | Property Gazette - April

Published by Scott Miller on Wednesday, April 06, 2011 in



   Our recovery has literally been shaken to a standstill, with major seismic events both locally and in Japan hitting home, the focus of people is survival and recovery not economic growth.

We had started 2011 quite strongly, commodity prices (read dairy) were surging, mortgage approvals were on an upward trend breathing life into the real estate market and confidence was improving overall, not that it had yet flowed through to retailers.

However with the events of Christchurch & Japan hitting us all between the eyes our economy is taking a massive hit with an estimated $15 - $20 Billion of capital destroyed and needing to be replaced. The process of which will stimulate economic growth but having this thrust upon us by having to replace assets lost is not the sort of growth we were looking for.

Thankfully, prudent management by government has seen us in the fortunate position of a strong balance sheet with relatively low levels of debt which allows us to lean on this position to stimulate the growth that is needed.

The Reserve Bank cut interest rates by a surprising and quite whopping 0.50% which with more than half of New Zealanders on a variable rate mortgage currently will be pleasantly felt in the pockets of all of these mortgage holders immediately. Surprisingly we say because while this was described as “an insurance measure” it is still in the face of an inflation rate that sits at the maximum of government preferred scale @ 4%, albeit no doubt we need help given the size of the challenges ahead.

Recover we will though, with Rugby World Cup set to pour millions into our economy and of the course the rebuild of Christchurch set to start a huge cash-flow cycle not seen in this country for many a year.

With interest rates so low many a consumer is unsure as to what the best interest rate option is for them right now but we are leaning to sitting on the floating rate as these are the cheapest in the market in the mid 5% range and we cannot see any increase on the horizon in the immediate future, in fact we do not believe that we will see any increases until the very back quarter of 2011 and maybe not until early 2012. Why pay 6.40% now we you can enjoy mid 5%?

What's Hot
With the above reduction in interest rates, the Variable rate is certainly hot right now, with the 0.50% off rates this has equated to a saving of over $1500.00 per annum on the average mortgage, coupled with a continuing loosening of bank criteria we are seeing the first home buyer market starting to perk its eyes and ears up.

Deal of the Month
90% LVR lending is well & truly available; the trick is understanding the criteria and knowing how to package the application up so it meets the same. Last month one of our Advisers had a Referrer on his doorstep with a client who had been declined by 3 banks, we got him approved and saved not only his purchase but the 3 backed up on it - Call us we deliver!

Floating home loan rates tumble

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

As Advanced Mortgage Solutions had largely expected and discussed in March’s AMS Property Gazette, today we saw the Reserve Bank announce a reduction in the Official Cash Rate today from 3% to 2.5%.

ANZ, ASB, BNZ, National Bank, Kiwibank and Westpac moved quickly this morning cutting their floating rates by 50 basis points after the Reserve Bank announced it had reduced the OCR.

These changes follow reductions in fixed mortgage interest rates last week, making the major bank medians for floating, six-month and one-year rates all below 6%.

Floating rates are as follows:

ANZ – 5.74%

ASB – 5.75%

BNZ – 5.99%   (Total Money 5.59%)

National Bank – 5.74%

Kiwibank – 5.65%

SBS – 5.65%

Westpac – 5.75%   (Choices Everyday rate 5.60%)

ASB chief executive Catherine McGrath says the terrible tragedy in Christchurch will have far reaching consequences, not only for its customers in that region, but for the whole community and the wider economy.

"While the OCR is just one factor that we consider when setting our interest rates, we hope that by dropping our variable lending rates now we can assist the Reserve Bank to alleviate the new financial pressures now confronting so many New Zealanders."

Westpac economist Dominick Stephens says Westpac concurs wholeheartedly with the Reserve Bank's assessment, and takes the Reserve Bank at its word that the OCR will rise rapidly in 2012.

 "At the margin, we'd favour an even steeper yield curve than the market has so far delivered."

Kiwibank's floating rate has been cut to 5.65%, which is immediate for new customers and effective in two weeks for existing customers.

The ANZ and National Bank FlexiPlus rate has also been reduced to 5.65%, to come into effect from March 28, for ANZ new and existing customers and from March 29 for National Bank new and existing customers.

For the most part these changes will take effect immediately for new clients but may take up to a month for existing clients.

Please feel free to contact me if you have any questions or would like to make comment.

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.

Variable

6.10%

6 Month Fixed

5.95%

1 Year Fixed

6.19%

2 Year Fixed

6.45%

3 Year Fixed

6.85%

5 Year Fixed

7.50%

   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!

22 Feb 2011 - Christchurch Earthquake

Published by Scott Miller on Wednesday, February 23, 2011 in


    As you will have heard by now Christchurch has had another massive earthquake. When you include the first earthquake on September 4th 2010 it makes this the fourth major earthquake in Christchurch within 6 months.

Having been through each of these earthquakes I can honestly say that todays was the most powerful in regards to outright damage. The epicentre of today's earthquake was centred in Lyttelton (about 6kms from Christchurch), whereas the initial earthquake in Sept.'10 was centred just outside of Darfield (about 40kms from Christchurch). The other difference this time around is instead of the earthquake centre being relatively deep in its origin, today's earthquake was only 5kms below the surface.

As I write this we are continuing to be shaken by aftershocks but these are not as violent as this afternoons.

I have taken some photos of the damage sustained to our home and its surroundings. Please feel free to click the link below to be taken through to pictures on my Facebook account.

 

 

 

I would like to pass on our thoughts and best wishes to those who have been affected by the Christchurch earthquake. We would also like to offer assistance to any who require help. Please feel free to call us on 980 4541 if you think we can assist in any way.

AMS is open and operating and ready to answer any of your questions. We are expecting an influx of calls and enquiries so please be patient if we are unable to answer your enquiry straight away as we will get back to everyone.

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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