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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 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!

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