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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.

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

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