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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.

Property Gazette - September

Published by Scott Miller on Tuesday, September 06, 2011 in

       Welcome to September's edition of AMS's Property Gazette. The big talk around town for the last month or so has all been about interest rates. What are they going to do.....go up.....or go down? Well, with no clear answer interest rates continue to dominate the headlines.

Current Interest Rates as at 5 September 2011  
 
Variable                    5.60%  
6 Month Fixed               5.60%
1 Year Fixed                5.70%
2 Year Fixed                6.20%
3 Year Fixed                6.70%
5 Year Fixed                7.40%
 
Interest Rate Outlook

Predicting what interest rates are going to do is very difficult right now. No sooner does there appear to be the movements of recovery in NZ & demand for fixed interest rates and the next thing the global debt crisis worsens and we all start second guessing each other.

Clearly our friends in the US and Europe are experiencing some difficulties in relation to their debt and funding troubles, and this affects us. Due to our size we fund a good portion of our residential mortgages from international money markets.

As Europe and the US scramble to keep their credit ratings and heads above water the price of purchasing fixed term money remains low and our earlier concern that fixed interest rates could spike has eased. However this easing may be short lived.

Locally, we are still showing signs of recovery with housing consents starting to move upward and the level of mortgage approvals up some 20% on 2010, indicating activity is definitely on the increase. Furthermore as soon as the government can coordinate the overseas reinsurers to provide cover on new houses built in Christchurch, the sooner markets will kick-in. Currently it is this stifling that is slowing the rebuild and recovery in the region.

With so many variables outside of our control, it does not give anyone much confidence to make bold predictions, and while the fixed rate pressure has eased, we still feel the international debt crisis has only delayed the inevitable rate increases. We do not believe we will see rates increase in September now as originally thought and may be pushed out to as far as the end of the year, however as we have seen this can change in an instant.
 
Put simply if you are of conservative nature, the current sub 6% rates for 1 year or low 6% for 2 years still look appealing, if you are more aggressive and are prepared to keep an eye on the market the current variable rates are still the cheapest option. A more prudent option is to have some of your loan on fixed and some on floating.     
 
What’s Hot

As the above outlines the finance market sure is a fickle place and majority of our clients really are confused as to what the right thing to do is in relation to interest rates right now. The single biggest demand we currently have is for advice on interest rate strategy – call me to work out yours.
 
Deal of the Month

An active Investor already carrying a sizeable debt fell at our door last month, exhausted by declines from his current financiers. As we had a wider range of options we were able to get $885,000 approved for him funding him into his next project - call us we deliver!

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