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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 - November

Published by Scott Miller on Thursday, November 03, 2011 in

 

  Welcome to November's edition of AMS's Property Gazette.

So the Rugby World Cup has been won by the All Blacks! Congratulations New Zealand and congratulations the All Blacks, what a wonderful display you put on for us. I don’t know about you but that was one of the most nerve raking games I have ever watched. However a 1 point win is as good as a 20 point win once the final whistle is blown.

It has been widely reported that New Zealand put on a fantastic show and that once again we have been pushed into the world’s spotlight. I believe the benefits of hosting the Rugby World Cup will filter through to our economy for many years to come.

So onto the economic news in New Zealand and around the world.



Current Interest Rates as at 1 November 2011
 
Variable                 5.60%  
6 Month Fixed        5.59%
1 Year Fixed           5.59%
2 Year Fixed           5.89%
3 Year Fixed           6.45%
5 Year Fixed           7.25%
 
Interest Rate Outlook

The world, in economic terms has been doing it tuff now for several years. To once again see more prosperous times, it’s going to take the sum of many moving parts working together to make a difference. There are still those variables we cannot control, (think Referees here) such as the state of the European & American economies, which unfortunately our banks still have to approach for their off-shore funding. We will always be susceptible to their financial stability but more and more New Zealand lenders are trying to limit the amount they need to borrow from offshore, (similar to taking the referees decisions out of the game).

Internally, our economic engine continues to be our rural sector and while commodity prices have come back somewhat the market is still strong. The rural surge is timed nicely with the historically low interest rates allowing farmers to reduce debt, freeing up some internal bank capital. Our beautiful country is also set for a tourism boom on the back of what the world has just seen and this should assist the retail sector continue their strong year on the back of RWC.

So there appears to be money flowing in our economy, we just need to ensure this is best utilised, not unlike the farmers, reduction of debt should possibly be many individual’s focus.

Sustained low interest rates are also helping the housing sector as we see the average days to sell houses continue to drop and many examples of multiple offers being placed properties, a momentum we believe will carry through the traditionally buoyant summer months.  

As for a current borrowing strategy, variable rates look set to remain at current levels through until mid-2012, accordingly, the floating rate looks the best option right now, although 1 year & 18 month rates are practically the same and provide some nice stability of payment. For those prepared to pay a small margin of 0.25% - 0.50% you can now lock in for 2 years.
 
What’s Hot

The annual Spring race for asset growth is on seeing the banks all coming out with some weird & wonderful incentives to convince consumers that they are the best option. The most innovative being a replica RWC if you take a mortgage (and yes we have access).
 
Deal of the Month

Equity solves most problems for banks, last month we funded a lady into a house whereby she had only been in her start up business for 4 months, however with 50% deposit we were able to structure the deal by putting 1 years payments aside and securing the house - call us we deliver!


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