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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 news for July

Published by Scott Miller on Tuesday, July 28, 2009 in
Blog

Welcome to my newsletter for July 2009.

Internationally:

 There has been a lot of positive news out in the market at the moment. World stock exchanges have had 10%+ rallies over the last two weeks, noticeably the Dow Jones sneaking past the imaginary 9000 point barrier and the NZX 50 passing the 3000 point mark. This is good news and long may it continue. I suggested in my May commentary that if the northern hemisphere had a good long summer with positive financial news that it would filter down to the New Zealand economy, and it certainly has been positive so far.

Locally:

 The OCR announcement this Thursday is expected to bring up no surprises with most economist’s predicting a hold on the cash rate at 2.5%. What does this mean? Well for the short term rates (6 months and 1 year), I expect there will be very little change if the rates stay the same. If rates do fall I would imagine only a small flow-on from the lenders would take place. The promised bank war on rates has not eventuated, although don’t count this out from happening in the near future as competition for customer retention is heating up. There is continued pressure for longer term rates (18 months, 2, 3, 4, and 5 year rates) to increase, albeit slowly. If your home loan(s) is coming up for renewal within the next 60 days please contact me here and I will approach your lender to ascertain any potential discounts available for you.

 On another local matter there is good news for first home buyers with little or no deposit.

 The following is an update on the current Welcome Home Loan product.

“Welcome Home” loan lending limits look set to increase

Lending limits for “Welcome Home” loans for first home buyers look set to increase next month, opening the scheme up to low-income home-buyers in parts of New Zealand for the first time in several years. Housing Minister Phil Heatley has told Parliament’s social services select committee that the current $280,000 loan limit for the scheme could be raised by the Cabinet on August 3 to between $320,000 and $350,000.A spokesman for Housing Minister Phil Heatley has said there were no plans to change the income limit of $85,000 for a household of one or two people, but it was clear that the loan limit had fallen behind property values, especially in Auckland.

NZ Housing Foundation director Brian Donnelly said the new loan limit could make the scheme useful in Auckland if it was extended to cover shared equity arrangements where first home buyers buy only 75 or 80 per cent of the value of a home, with the rest owned by a joint owner such as the Housing Foundation.

Welcome Home loans:

 Loans up to $280,000 for first home buyers.

  • Household income must be under $85,000 for one or two borrowers, or $120,000 for three or more borrowers.
  • 15 per cent deposit required for loans above $200,000.
  • Proposed loan limit increase to $320,000 or $350,000 would finance homes worth up to $376,470 or $411,765 if borrowers can find the required deposits.

This product is available through Advanced Mortgage Solutions and if you would like more information please click Here.

Tip of the month:

House prices seem to have found their low point.

If you are in a position to hold onto your current property portfolio without it causing an undue financial strain then do so. Don’t misunderstand me; if you have a particular property that is not behaving itself by all means sell it. However with net migration breaking all sorts of records, the economy being as bad as it has for so long, and continued historically low interest rates house prices are going to make a comeback. The time where capital growth was the reason for owning property although still a while off, is returning, and from the bottom it can only go up.

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