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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.

Insurance Broker Onboard

Published by Scott Miller on Monday, September 01, 2014 in

*Exciting Announcement*

It’s Spring – So we’re in growth mode!

 Advanced Mortgage Solutions is an established successful Christchurch Mortgage Broking Company owned by Scott Miller which has been trading for the past 9 years. This year the company has been in growth mode after successfully trading through what could only be regarded as one of New Zealand’s most challenging property and lending market’s after the city was hit by the 2010 and 2011 earthquakes.

 

In February 2014 Maria Thackwell joined the team after 3 years of running her own successful broking business and previously to this had 26 successful years with Westpac as one of their top Mobile Mortgage Managers in the country.

 

The team has recently expanded further with the addition of another experienced Registered Financial Adviser, Brennen Lewis who specialises in Risk Insurance. Advanced Insurance Solutions Ltd has been established and will operate alongside Advanced Mortgage Solutions Ltd to provide our existing and new clients with comprehensive insurance solutions as well as ongoing expert advice tailored to them in regard to their financial and insurance requirements.

 

We see this as another way to provide both our new and existing clients with ongoing support, advice, direction, as well as comprehensive options and solutions in regards to protection of their major assets and their livelihoods. In doing so we are giving them the ability to protect what is important on an individual basis so they can live the lives they desire in the best and worst of times.

 

Our goal is to provide a wide yet easy to understand set of product options and solutions within a “one stop shop” environment for our clients while retaining professional, qualified and comprehensive product and pricing advice from experts.

Please feel free to contact the team for further information – 0508 466 356 and visit our website at www.advancedmortgagesolutions.co.nz . We are very excited about helping our clients make informed decisions and hope that you will be interested in sharing our successes to date.

In celebration of this Milestone we will soon also be running a Facebook Draw to allow you to “grow your garden” this Spring so if you’re not following us already please like our Facebook Page https://www.facebook.com/mortgagebrokerchristchurch watch this space and be in to win.

Property Gazette - August

Published by Scott Miller on Wednesday, August 06, 2014 in

Property Gazette - August      

Home Loan activity seems to have followed the weather lately in that one week it’s glorious and the next it’s cold and miserable! Interpreting that into “Home Loan” language, what we are saying here is that we are absolutely flat out one minute and the next everyone seems to have hunkered down with the cold weather.

It is winter after all and once Spring has sprung we generally see more consistency in the market.

In saying the above we have certainly been helping our clients secure some very hot deals, and dealing with some cold responses from the banks which with a little persistence we have turned around which is certainly one of the many benefits of using our services. We are happy to push boundaries where many people aren’t, we always look outside the square and have a common sense approach to bank policy which is sometimes overlooked.

Take the client who was declined initially on the fact that a Credit Card payment was missed by two days, yet the following month the same Bank actually increased their Credit Card limit internally showing that one department was not concerned by this fact and another declined citing “account conduct”. This is where analysis of repayment history over a longer term was imperative and a common sense approach need to be taken. It most likely doesn’t need saying that our client was very happy with our services!

So upwards and onwards towards Spring, warmer days, longer evenings and a general feeling of wellbeing, which sees people out and about more and making plans in regard to buying and selling homes after winter.

As always, we are here to help, not only with new borrowing but for existing home loan clients who would like our assistance in renegotiating the banks “window” rates that are offered by letter with no discounts.

Rate Available as of 6th August 2014

Floating - 6.34%

6 Months - 5.70%
12 Months - 5.94%
18 Months - 6.15%
24 Months – 5.99%
36 Months - 6.25%
48 Months - 6.49%
60 Months - 6.69%

*All rates subject to change without notice and not available to all borrowers.

There are a number of forces at work in the property market at the moment. On the one hand we have an improving labour market, which is looking to push up house prices throughout the country. Following that we also have an increasing number of immigrants arriving, adding to our housing shortage.

However, on the other hand there is not a lot of activity in the real estate market at the moment, which is preventing house prices from increasing dramatically. Rising interest rates are playing their part too. We’re also seeing an increasing number of residential building consents, which could prevent our housing shortage from becoming an even bigger issue.

In the real estate market we’re seeing the number of house sales continue to slide, with six of the last eight months reporting declines, meaning we’re currently sitting at 17 percent fewer house sales than October 2013.

Annual house price inflation is still looking strong, but has dropped marginally in the last quarter to sit 1 percent lower than its recent peak. Housing affordability has taken a bit of a hit recently with mortgage rates continuing to rise, but the damage has been limited with a favourable discounted interest rates.

Looking now to the big picture, and that economic momentum that’s been steamrolling forward recently has also started showing signs of slowing. The growth of our annual GDP is estimated to slow from around 4 percent in mid-2014 to around 3 percent in 2015. The construction boom (mainly in Auckland and Christchurch) is doing its part to in keeping the forward momentum, but those rising interest rates and the high NZD are taking their toll.

What’s Hot

A number of banks have been changing their fixed mortgage rates in the past month. While we’ve seen rises in 6 month to 3 year rates, we’ve seen a reduction in 4 and 5 year rates, meaning the mortgage curve is starting to “flatten”. This makes fixing for longer terms start to look a lot more attractive. We think the 2 – 3 year rate to be right in the sweet spot, and while the floating rate hasn’t changed, the 6 month rate continues to be the lowest.

Deal of the Month

Here’s another great deal we heard about last month. The lending was for property development on a lo doc basis. A client wanted funding to settle the purchase of multiple residential properties that they were keen to redevelop in the future. A part capitalised interest facility was provided to support debt servicing in the interim.  As security for the loan they offered three of their own residential properties, so they obtained a 12 month loan of $1,080,000 with an interest rate of 9.25%, and an LVR of 75%.

We appreciate your business, support and referrals to your friends, family and colleagues as there is no better recommendation than this!


Kind regards

Scott and Maria

July's Property Gazette

Published by Scott Miller on Monday, July 14, 2014 in

Traditionally winter brings some slower months in the property market with people preferring to stay home and keep warm. Couple that with this being an election year which throws some hesitation from consumers into the mix due to uncertainty around possible policy changes affecting property, rules and regulations or interest rates from parties vying for votes, and to top it off we are in the 3rd year after a major disaster when people are doggone tired.

Despite all of the above Advanced Mortgage Solutions has certainly had our share of First Home Buyers, Home Buyers, Investors and clients re-financing from one lender to another for a variety of reasons which stands us in really good stead for when things return to “normal”.

One thing that has been really noticeable lately is the interest we have had from other complimentary businesses wanting to refer their clients to us as they know they will be looked after well and in the hands of experienced Financial Advisor’s with years and years of experience under our belt.  This is a huge compliment to us and in return we also develop stronger relationships with these complimentary businesses that can also assist our clients in one way or another as they put in place their financial goals.

If you are unsure about who to use in regard to a Lawyer, Accountant, Authorised Financial Advisor (Investments) Quantity Surveyor, Valuer or Risk Advisor we are happy to give you recommendations of a couple to choose from. Having an endorsement from those someone else has done business with is always helpful.

We have also seen plenty of movement from the banks in regard to lending above 80%. Funds are available in this space, so if you or anyone you know is sitting back thinking that it’s all too hard, it’s time to think again and come and see us.

TC3 finance approvals are now becoming slightly easier also with an approval of a fully repaired home at 84% loan to value ratio. It is still case by case however one bank is no longer interested in the “TC” rating as they have a system that will assess the land and lend accordingly. There is still most certainly more risk to the banks in lending on these properties so the paper war can be quite daunting, but slowly things are changing as homes are repaired, rebuilt and water goes under the bridge.

Finally, the biggest compliment you can give us is to refer your family & friends to Advanced Mortgage Solutions. Most people think that you use a Broker after things get broken with your own bank, but those who have used our services know it is best to come and see us first and let us do the shopping for you free of charge to make sure you get it right first time.


Current Interest Rates as at 10 July 2014


Variable               6.15%
6 Month Fixed     5.80% 
1 Year Fixed        5.85%
2 Year Fixed        6.00%
3 Year Fixed        6.25%
5 Year Fixed        6.89% 

*All rates subject to change without notice and not available to all borrowers.

Property Prices

The number of house sales around the country have started to drop, and although house prices continue to increase, the pace of this increase has certainly slowed. A couple of influencing factors are trying to push prices in the opposite direction, these include an improving market backdrop, an increasing number of immigrants arriving on our shores, and a decreasing number of houses for sale. But change is in the air, and we’re starting to see the initial signs of a cooling labour market.

The month of May saw a very slight rise in house sale numbers, but we are still way off the numbers we were seeing before the Loan to Value Ratio limits were introduced. There’s no doubt that real estate turnover has become sedated, and price gains are slowing too. However on the other side of the coin, a rise in migration is increasing demand for housing, this coupled with a smaller volume of houses for sale, means we are seeing property prices resisting the drop.

However, an increase in interest rates has taken its toll, and further increases are expected soon. First-home buyers are going to continue to find it hard to get into the market as property becomes less affordable, even more so with increasing demands for debt servicing.

There is something to look forward to however – it’s expected we’ll have an annual average GDP growth of 3.7 percent this year, with a growth of 2.9 percent estimated in 2015. But before you all get ahead of yourselves, remember there are still risks and vulnerabilities.

While global growth continues to improve, it’s still in a fragile state. Likewise, New Zealand’s commodity prices are high, but they’re starting to fall. Also, our economy is still in debt, which means our potential growth is naturally stymied. We simply don’t have the capacity to be growing at this rate for long.

One of the major contributors to our nation’s growth is expected to be the construction sector, as the rebuild in Christchurch continues, and earth-quake strengthening is implemented throughout the rest of the country.

What’s Hot

Despite a third successive increase to the Official Cash Rate (OCR), mortgage rates for a number of banks haven’t changed significantly. However, with the OCR tipped to rise even further, we wouldn’t be surprised to see rates that have resisted change go up as well. So now’s the time to look at those fixed rates, many of which sit lower than floating. Come and talk to us to see what money you can save…..

Property Gazette - March

Published by Scott Miller on Sunday, March 23, 2014 in

Once again it’s been a busy month at AMS! There is certainly no “let up” in the lending space regardless of the Reserve Bank loan value to ratio rules regarding borrowers with low deposits. Where there is a will there’s a way and we are seeing parents coming to the party with assistance for their first home buyer children with either equity or loans and gifts.

Lending is in fact happening over 80% of purchase price as well.

Never before has there been a more challenging time to be borrowing however, mix in Earthquakes and damaged homes, land damage, loan to value rules from the Reserve Bank and there are still plenty of potential home owners sitting, thinking that it is just a “too complicated” market currently.

That’s where we come in.

Day in and out we are talking with the Banks about lending giving us the “feel’ for what fits and what doesn’t and being right on the pulse is important in a changing  and complex environment.

Many clients do what they consider to be the least stressful and easiest option and just go into their own bank looking for support, but what is easiest and most comfortable isn’t what is necessarily what’s best. Getting an approval up front first time from the right place saves the situation where a decline can taint your next option. A decline shows on your credit history as an enquiry for the next lender to question, be it that you just didn’t fit your own bank’s particular policy or not and makes the next lender question why your own bank may not want your custom.

Approval first time, saves time!

To help support those in the first home buyer space we have also written a guide  called Deposit less than 20% and tired of paying rent?... Our Guide to low deposit lending and options- Part one about the ins and outs of lending in this market, tips and advice about making yourself a good bet for the bank, and what to do when.

Check out our blog here http://wp.me/p4bD5z-1F

Have a great month!

                                                  Current Interest Rates as at 18 March 2014

                                                               Variable               5.40% 

                                                                6 Month Fixed     5.35%

                                                               1 Year Fixed        5.60%

                                                               2 Year Fixed        5.90%

                                                               3 Year Fixed        6.20%

                                                               5 Year Fixed        6.85%

 

Interest Rate Outlook

Last Thursday was the first time in 3 years that the Reserve Bank has lifted the Official Cash Rate which it moved by 0.25%. In isolation this move would have little impact on our property market but given it has been laid over the top of the LVR restrictions put in place in October 2013 it appears that we may finally be seeing a slowing of our property market.

The volume of house sales has slowed through the first quarter of 2014, the pace of price increases has eased and the average days to sell a house slowed.

Many economists are predicting total interest rate increases in 2014 to be around the 1% mark (so another 0.75% through the balance of this year), we are a little cautious about this given the ‘spike in our dollar’ on the back of last week’s small increase which will surely make the government nervous, given the impact on exporters.

Of course we also have an election due in September so rising interest rates and dollar would certainly make government nervous. Although the National party state that they have no influence over the Reserve Bank and monetary policy.

The flip side to the rising interest rates is the 10 year highs in migration with over 22,000 net increase in our population last year which continues to drive house demand. However building of new homes seems to finally be kicking in with over 21,000 consents issued in 2013 which is the highest number since 2007.     

What does all this mean in terms of a borrowing strategy?

Yes variable rates have increased and are likely to again once or twice this year, as such sitting on a variable rate probably doesn’t make much sense unless you are looking to make lump sum principal reductions or repay in full within the next 6 – 12 months.

However, we also caution against fixing in for too long which does carry a premium for certainty. The mid-range fixed rates of 2 - 4 years appear to carry the most value at present, although if you have a sizeable mortgage perhaps a split of longer and mid-term fixed rates would benefit you. It is best to sit down with us & discuss your options.    

What’s Hot

With the recent rise in the official cash rate many consumers who were on a floating interest rate have panicked somewhat, seeing us inundated with requests to fix their rates. The good news is the 18 month to 3 year fixed rates have remained unchanged giving clients a pleasant surprise.   

Deal of the Month

LVR restrictions within the banks are definitely easing, we recently had a client looking to move into property investment with their total LVR sitting at 85%, we were able to get this client approved whereas as little as a month ago this would not have been the case, banks are now getting a handle on managing their allocation of high LVR lending, talk to us - we deliver!

February's Property Gazette

Published by Scott Miller on Tuesday, February 11, 2014 in

February - Property Gazette 

It has been an exciting month for AMS as we see the company grow with the addition of a new Mortgage Specialist. Maria Thackwell who has 20+ years retail banking experience and successfully ran her own broking company has joined the team. Maria has a reputation for her knowledge and commitment to her clients along with her passion to see her clients meet both their immediate short and long financial goals. We welcome her arrival and know that AMS will continue to grow it’s already established reputation for outstanding services to our clients.

Lauren Timblick, Personal Assistant to Scott and Maria has recently increased her hours to keep up with the increased business in the New Year. Lauren provides the team with the back office services that are paramount in running a business and also provides our clients with a fantastic service when their fixed loans come up for renewal. Lauren is efficient and friendly and has a wonderful rapport with our clients. If advice is needed in regard to the structure of your lending facilities or interest rates Lauren will arrange for Scott or Maria to make contact.

Due to our team increasing we have recently moved to a larger office in the same building located on the corner or Bealey and Colombo Streets (entrance on Bealey Avenue) and would love to see you if you’re passing.

All in all it’s shaping up to be a fantastic 2014. We have noticed that many people are more positive about Christchurch as our city rebuilds. We also acknowledge that for some times are still tough as insurance issues and the personal effects of the earthquakes are still worked through.

As always, we are here to help with your lending needs and appreciate your referrals to others you may know who would benefit from our help.

Kind regards

Scott, Maria and Lauren

 

Current Interest Rates as at 3 February 2014

Variable               5.59%

 Month Fixed      5.20%

1 Year Fixed        5.29%

2 Year Fixed        5.80%

3 Year Fixed        6.05%

5 Year Fixed        6.79%

 

Interest Rate Outlook

Welcome to our first Interest Rate Outlook for 2014. The sun may not have been shining over the break but our economy continues to improve, growing from strength to strength.

Last week saw the Reserve Bank meet to review the official cash rate (the OCR, being the rate that drives variable interest rates in NZ). While no change was made the comments from Graeme Wheeler gave us a very clear indication that increases are on the way, most likely to begin in March.

Without doubt the media will make a lot of noise around the anticipated rate increase but the reality is that the first move is likely to be small at 0.25% to a worse case of 0.50%. All indications are that we should expect a total increase through 2014 of approximately 0.75%, how this is delivered remains to be seen, it may be 3 consecutive increases of 0.25% or he may choose to drop one larger increase of 0.50%, sit back and see the impact of this and if it is not strong enough then add an extra 0.25% 3 months later.

We all need to keep such increases in perspective, remembering that post the major Christchurch earthquake the Reserve Bank cut the cash rate by 0.50% to help keep our economy going….. This “stimulus” has not yet been returned, as such an increase of this level just returns us to a neutral position of ‘pre quake’….

We also need to remember that the OCR only impacts variable interest rates, not the fixed rates which have already been “sneaking” upward over the past 6 months, as such any increase as indicated above will only impact clients on a Variable interest rate.

LVR restrictions remain, keeping property prices in check and demand restricted and this initiative combined with the above increases are expected to keep inflation in check and avoid any need for substantial rises. If your clients are concerned about rising rates, now is the time to send them to us for a chat (not after the interest rate increases).

What’s Hot

If you have a home loan that is under 80% of the value of your property there are some extremely hot refinance packages available presently. The more banks lend in this space the more loans it allows them to do over 80%, as such they can be very aggressive in pricing.

Deal of the Month

Last month we had a client going through a matrimonial split, he hadn’t accessed his Kiwisaver funds to buy the home (as hadn’t meet the time criteria), however he now meets the criteria & we have helped him access this under “second chance” to make his pay out– Talk to us, we deliver! 

 

Property Gazette - November

Published by Scott Miller on Tuesday, November 05, 2013 in

 
Current Interest Rates as at 04 November 2013   
Variable                 5.59%  
6 Month Fixed      5.20%
1 Year Fixed        4.99%
2 Year Fixed        5.45%
3 Year Fixed        5.99%
5 Year Fixed        6.55%
* Please note the rates published above are for new under 80% lending only. Please contact me if you are looking to fix or rollover your existing lending.
 
Interest Rate Outlook

It is far too early to tell what impact the Reserve Bank’s lending restrictions have had on our market, but our “gut feeling” suggests that new lending has taken a bit of a hit in October. It will however take a full 6 months before the full impact is known.

Activity in September was very strong, with sales up from the same time last year by almost 20%, although a good size of this can be attributed to consumers rushing out to market to use their preapprovals before they run their course.  In fact we saw the average days to sell a property in New Zealand reduce to 34 across the country with some regions under the magical 30 day mark.

Average days to sell a property is seen as a major temperature gauge on the market with the lower the number indicating the hotter the sales. The month of September recorded the lowest average number of days to sell since 2006.

Further fueling our supply/demand is the surging migration numbers of new people entering NZ. Currently there has been a net increase of over 20,000 people in the 2013 calendar year, all needing somewhere to live. Again this reflects a 5 year high on previous years’ numbers. On top of which our economy continues to perform well and with real momentum fuelled by record global dairy prices, the continuing strong Auckland property market, and of course the Canterbury rebuild which is in full swing.   

While the floating interest rate continued to remain unchanged as the Official Cash Rate remains flat at 2.50%, some of the longer term fixed rates have continued to trend upwards creating more value in the shorter term fixed options currently on offer.

While the Reserve Bank are looking to use every option open to them other than to tweak interest rates, it’s difficult to see value in the 4 – 5 year fixed options (by themselves) with the 1 year rates as much as one full percent cheaper. The tried and tested strategy of splitting debt into part short term fixed and part mid - long term still carries good weight as a valid option in the current market – as always though, every client’s circumstances are different so talk to us before making a call.  

What’s Hot

The housing Corp sponsored Welcome Home Loan has really become popular as pretty much the only “stand alone” over 80% LVR lending option in the market today. There are a few hoops to jump through to qualify but we know them all so send your clients here first!   

Deal of the Month

A client was referred to us who had been “mucked around” by another financier for close to 4 weeks with no success. The reality of this case is that it needed a guarantee from Mum & Dad to make it work, which was available. We stepped in, got it all sorted and had a happy purchaser -call us now, we deliver!

Property Gazette - October

Published by Scott Miller on Monday, October 07, 2013 in

This month we are starting to see the impact of the Reserve Banks implementation of the 20% minimum deposit rules. You will probably be aware of ASB's decision to cancel all of the preapproved loans where the deposit was less than 20%. Fortunately no other lender has followed.

We will start to see the 'taps' turned on again in the low-deposit space in about 4-5 months as the existing preapprovals work their way through the system. There are of course alternatives - Please contact me on 0508 466 356 to discuss these options.

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 03 October 2013  

                                   Variable                 5.59%  
                                    6 Month Fixed       4.99%
                                     1 Year Fixed         4.95%
                                     2 Year Fixed         5.45%
                                     3 Year Fixed         5.99%
                                     5 Year Fixed         6.55%

* Please note the rates published above are for new under 80% lending only. Please contact me if you are looking to fix or rollover your existing lending.

 
Interest Rate Outlook

We have a third of the customers in the nightclub over indulging….. so the bouncers cut all drinks to all patrons…. That doesn’t make sense does it? Certainly not, especially for a mild mannered drinker like myself! I apply this analogy to the recent Reserve Bank rules limiting the amount of loans the banks in NZ can provide to clients who want to borrow more than 80% of the purchase price of a property.   

While the Auckland property market continues to be extremely buoyant, the rest of the NZ property market was shuffling along, (accepting that Christchurch has some earthquake related price issues).

As such the recent above moves do not make any sense for two thirds of the country, that said Mr Wheeler (Governor of the Reserve Bank of NZ) has shot his cannon so to speak and we all have to deal with the fallout (interesting to note the government are distancing themselves from the decision, stating that it is a Reserve Bank decision they have no jurisdiction over!).

The fallout is hurting Kiwis across the country as first home buyers are coming to the realisation that they now need to save a heck of a lot money as a deposit to get into a property or rely on accommodating parents who will act as guarantors for them. Over the weekend I added the following page to the Advanced Mortgage Solutions Website to help those wanting to purchase a property with less than a 20% deposit saved.

The pain is somewhat offset by the government sponsored Welcome Home Loan, which allows a 10% deposit of a purchase price, however it does come with a number of “caveats” around who can qualify, as such never more has the services of a quality Adviser (like us) been required, to provide guidance to clients through the current mortgage landscape.

The above change should see interest rates steady for the balance of 2013, however as mentioned last month, longer term fixed rate money has already shot up considerably, jumping up circa 0.75% over the past two months. Please do talk to us now; our advice has never been more important!


What’s Hot

The ability to borrow 85% of the purchase price of the property! There are currently 2 banks in NZ providing this product, although the criteria are tight! There is also one non-bank lender currently providing finance to 90% of the purchase price, they are “red hot” right now!     

Deal of the Month

Ahhh, the 2pm call from a desperate Real Estate agent. Can you help my client, finance expires at 4pm today and they have been declined….. ! Last month we saved a deal on the death knell for an agent due to our access to the above products – don’t wait - have your clients call us now!

I look forward to hearing from you with any questions you may have.

September's Property Gazette

Published by Scott Miller on Wednesday, September 04, 2013 in
 

This month's Gazette covers off the changes brought into effect by the Reserve Bank which has an effect on the minimum deposit requirement.

Please read the following carefully as what has been reported in the media can only be described as woefully incorrect.

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 02 September 2013

                                                     Variable        5.59%*  
                                           6 Month Fixed        4.75%*
                                              1 Year Fixed        4.94%*
                                              2 Year Fixed        5.45%*
                                              3 Year Fixed        5.80%*
                                              5 Year Fixed        6.29%*
 
* Please note the rates published above are for new lending only. Please contact me if you are looking to fix or rollover your existing lending.

Interest Rate Outlook

August was a sledgehammer of a month for the housing market. The much vaunted “Macro Prudential” rules the Reserve Bank have been making noises about, were finally announced, and while (in my opinion) they will do little to address the rising Auckland property market, they will have some effect on growth outside of the region.

It was announced that post 1st October NZ Banks cannot lend more than 10% of their lending over 80% Loan to Value Ratio (that is lend clients more than 80% of the value of the property they own or are buying). To put this in perspective we need to understand that traditionally over 80% Loan to Value Ratio loans are generally of a smaller dollar size than under 80% Loan to Value Ratio loans. As such the 10% of actual dollars approved will equate to approximately 15% of the loans they make.

Again, perspective is important here, prior to these changes announced; banks currently make approximately 20% of their loans in the above 80% Loan to Value Ratio space. Accordingly, long term the changes announced are nowhere near as drastic or restrictive as first thought.

However, these changes come with one BIG speed-bump that is going to last for the next 6 months. All NZ Banks have a current pipeline of pre-approved clients, already approved to borrow more than 80% of the value of property they want to buy. Pre-approvals last 6 months and all NZ banks are committed to honouring these pre-approvals, which means that for the next 4 – 6 months NZ banks will not be able to approve many (if any) above 80% Loan to Value Ratio loans until this already approved wave of money flows through the NZ banking system.

August also saw mid to long term fixed interest rates move quite substantially upward with increases of 0.50% in the 4 & 5 year rates while 3 year money moved 0.30 – 0.40%. This change now effectively makes long term fixed rates quite unattractive as they are simply too expensive to offer value.  Value now appears in a mix of 1 & 2 year fixed rates as the above two recent developments should see interest rates steady for the immediate 6 – 12 month future. Talk to us about your circumstances so you can make an informed decision around interest rate structure.
 

What’s Hot

Consumers looking to borrow above 80% Loan to Value Ratio are in a ‘mad panic’, as the above changes bite. We can report there are still ways to have loans approved with a smaller than a 20% deposit. Please feel free to contact me to find out how.
 

Deal of the Month

Not all banks are the same, as we can see above, last month we had a couple from the UK who had a 2 year residency visa which many of the banks did not like, however due to our wide panel of lenders we were able to get these guys approved, another happy client - Call us we deliver!
 

Mortgage Brokers Christchurch - Property Gazette August

Published by Scott Miller on Friday, August 02, 2013 in

Where has winter gone?

With only one month to spring it's hard to believe we had a winter at all.

The pressure by the Reserve Bank continues to have its effect on New Zealand lenders, but as you will read below - don't believe everything you hear. Last minute submissions from the lender may have some impact on the Reserve Banks final decision, but we will not know the full outcome until September/October.

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 02 August 2013  
                                              Variable                       5.59%  
                                              6 Month Fixed             4.99%
                                             1 Year Fixed                4.95%
                                             2 Year Fixed                5.25%
                                             3 Year Fixed                5.65%
                                             5 Year Fixed                5.99%
 

Interest Rate Outlook

Read all about it! One of our pet hates is the half-witted way the New Zealand media report the goings on in areas they have little knowledge of or don’t pay enough time investigating. By the media’s reporting it is now impossible to borrow 95% of the purchase price of a house in New Zealand. This is factually incorrect, although it is a lot harder there is still lending available up to 95% albeit on a case by case basis as opposed to it being freely available to everyone who qualifies.

Yes, banks in New Zealand are tightening their appetite on the back of some fairly stern discussions with the Reserve Bank of New Zealand, so we are seeing these types of loans being harder to approve, however there are still a very good number getting through. In our opinion they will not be legislated out of the market altogether but for a time banks may be a little choosier as to whom they will lend 95% to.  

Building consents and house sales dropped in July. We put this more down to our traditional mid-year weather than an actual change in the market place. House prices remain on a strong upward curve, this is mainly due to the lack of stock which is all moving quickly, resulting in the average days to sell a house at a low of 33.

As reported last month, continued upward pressure remains on longer term fixed rates which have steadily been rising over the past 2 months (it is a pity the business media in NZ don’t have their eyes open to this fact to warn consumers who are blissfully unaware of these movements while they sit on their variable rate that has not moved).

As such when these consumers go to move onto fixed they will find out fixed rates moved some months back and they have missed the boat. Interest rates are only going to continue to trend upward in the foreseeable future, as such your clients should be talking to us NOW about structuring their debt the correct way to minimise rate rises, with the sweet spot looking to be around 2 - 3 years currently.
 

What’s Hot

In typical fashion the media is busy reporting half a story and scaring every potential first home buyer in NZ into rushing out to buy while you can still get up to 95% borrowing. Although not true please do keep in mind that lending criteria is becoming harder so please contact us if you are thinking of purchasing.

Deal of the Month

Not every self-employed client has their financials up to date and ready for borrowing funds, last month we had a self-employed guy with a good business which had increased and wasn’t reflected in financials, we got him sorted at a good consumer rate - Call us we deliver!



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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