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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.

September's Property Gazette

Published by Scott Miller on Wednesday, September 04, 2013 in

This month's Gazette covers off the changes brought into effect by the Reserve Bank which has an effect on the minimum deposit requirement.

Please read the following carefully as what has been reported in the media can only be described as woefully incorrect.

As you will read below, it has never been a better time to fix your mortgage. Please contact me NOW to see what I can secure for you.

So on with what’s happened this month.  

                          Current Interest Rates as at 02 September 2013

                                                     Variable        5.59%*  
                                           6 Month Fixed        4.75%*
                                              1 Year Fixed        4.94%*
                                              2 Year Fixed        5.45%*
                                              3 Year Fixed        5.80%*
                                              5 Year Fixed        6.29%*
* Please note the rates published above are for new lending only. Please contact me if you are looking to fix or rollover your existing lending.

Interest Rate Outlook

August was a sledgehammer of a month for the housing market. The much vaunted “Macro Prudential” rules the Reserve Bank have been making noises about, were finally announced, and while (in my opinion) they will do little to address the rising Auckland property market, they will have some effect on growth outside of the region.

It was announced that post 1st October NZ Banks cannot lend more than 10% of their lending over 80% Loan to Value Ratio (that is lend clients more than 80% of the value of the property they own or are buying). To put this in perspective we need to understand that traditionally over 80% Loan to Value Ratio loans are generally of a smaller dollar size than under 80% Loan to Value Ratio loans. As such the 10% of actual dollars approved will equate to approximately 15% of the loans they make.

Again, perspective is important here, prior to these changes announced; banks currently make approximately 20% of their loans in the above 80% Loan to Value Ratio space. Accordingly, long term the changes announced are nowhere near as drastic or restrictive as first thought.

However, these changes come with one BIG speed-bump that is going to last for the next 6 months. All NZ Banks have a current pipeline of pre-approved clients, already approved to borrow more than 80% of the value of property they want to buy. Pre-approvals last 6 months and all NZ banks are committed to honouring these pre-approvals, which means that for the next 4 – 6 months NZ banks will not be able to approve many (if any) above 80% Loan to Value Ratio loans until this already approved wave of money flows through the NZ banking system.

August also saw mid to long term fixed interest rates move quite substantially upward with increases of 0.50% in the 4 & 5 year rates while 3 year money moved 0.30 – 0.40%. This change now effectively makes long term fixed rates quite unattractive as they are simply too expensive to offer value.  Value now appears in a mix of 1 & 2 year fixed rates as the above two recent developments should see interest rates steady for the immediate 6 – 12 month future. Talk to us about your circumstances so you can make an informed decision around interest rate structure.

What’s Hot

Consumers looking to borrow above 80% Loan to Value Ratio are in a ‘mad panic’, as the above changes bite. We can report there are still ways to have loans approved with a smaller than a 20% deposit. Please feel free to contact me to find out how.

Deal of the Month

Not all banks are the same, as we can see above, last month we had a couple from the UK who had a 2 year residency visa which many of the banks did not like, however due to our wide panel of lenders we were able to get these guys approved, another happy client - Call us we deliver!

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