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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.

April's Property Gazette

Published by Scott Miller on Wednesday, April 01, 2015 in

As of today (1st April) changes to the KiwiSaver first home buyer packages come into effect. The KiwiSaver First Home Deposit Subsidy has been replaced with a KiwiSaver Home Start Grant. 

Put simply eligible first time homebuyers will now be able to withdraw all of their KiwiSaver savings except the $1,000 kick-start from the government. 

There will also be greater alignment with the KiwiSaver Home Start Grant and Welcome Home Loans for house price caps. The table attached shows the changes.  

 For more detailed information please click here to go through to the Advanced Mortgage Solution Website. 

If you want to talk to us about how we can help first time home buyers, give us a call on 0508 466 356.

March's Property Gazette

Published by Scott Miller on Thursday, March 19, 2015 in

People – there is a war out there! A war on lending.  

You may have seen the headlines SBS bank have a ridiculously low fee of 4.99% fixed for five-years. The advertising was a bit ambiguous, stating that you had to be an existing customer of SBS however, this is not the case. At Advanced Mortgage Brokers we can access this deal for you but we have been told by SBS that this rate will be available for a very limited time. If you would like to take advantage of this rate you will be expected to have your transactional accounts with SBS and place your income into this account.

If you want to talk to us about your options, give us a call sooner rather than later. 0508 466 356. 

Floating Rates to remain static 

We are pleased to see that there is currently no movement towards increasing floating rates this year. BNZ Economist Tony Alexander states: 

“The cash rate is likely to remain at 3.5% all this year thus your floating rate borrowing costs won’t change. Next year is a bit different. We suspect that the Reserve Bank will move the cash rate up from 3.5% to 4.00%. But the risk well worth backing is that they do absolutely nothing so you might see no change in your short-term borrowing costs both this year and next.” 

This is good news but with floating rates the risk is always there that they will rise. If you haven’t looked at the structure of your home loans in a while, feel free to contact us we are always happy to have a look at your setup and advise accordingly. 

Tips on buying your first home 

Advanced Mortgage Solutions with the help of Sorted.org.nz will set out some tips to get you on track for buying your first home. 

There is no getting away from it, you will need to save a deposit to buy your first home. Depending on deposit total (by accessing your savings, KiwiSaver, and the First Home Buyers Subsidy), there are many different options available to first home buyers. 

Generally lenders do require 20% deposit, however there are exceptions to every rule such as the Welcome Home Loan. The Welcome Home Loan only requires 10% deposit and you can get help securing this deposit through KiwiSaver withdrawals or gifted by a relative. There are some rules applicants need to be aware of when trying to use the Welcome Home Loan product, so please don’t hesitate to pick the phone and have a chat with us about the process. 

There are also some positive changes to the Welcome Home Loan product that take effect after the 1st of April. We have a first home buyer’s guide that shows a step by step plan on buying your first home. This along with our experience will see you sail through the minefields of obstacles of buying your first home. 

Get into a habit of budgeting and not only will you get into your home much quicker, you’ll find repaying your home loan and covering all of your outgoings a lot less stressful. We also have a number of existing ways of structuring your home loan, enabling you to pay off your mortgage faster and save thousands of dollars in the process.

November's Property Gazette

Published by Scott Miller on Thursday, November 13, 2014 in

What you need to know about low deposit loans

With Wednesday’s announcement that Reserve Bank restrictions in regard to loans for those with less than a 20% deposit staying for now, with no changes to policy surrounding this, no doubt there are many thinking home ownership will always be out of reach.

Don’t be totally despondent though as there are options and solutions that may work for you. Banks review their appetite for low deposit lending regularly, particularly around surplus income required to meet their criteria for borrowers in this space. Where you could be declined one month, the next could see an approval based on the banks percentage of loans written and whether that figure is over or under the allowed percentages stipulated by the Reserve Bank.

The competition for borrowers with a 20% deposit is still fierce, and although this may seem unfair to those of you struggling to even get on the property ladder, it actually enhances your chance of financing a home with less than a 20% deposit, as every loan written in the “greater than 20 % deposit” space releases 10% of that loan amount to the pool for low “less than 20% deposit” lenders.

Take it that Mr Smith with a 20% deposit is settling a  $500,000.00 loan this week, that means the low deposit pool now has $50,000.00 available to lend to those who meet the criteria. Some weeks we have seen banks with no funds to lend in this space, so this means that even though there is demand, there is no supply and therefore a decline may not need to be seen so personally as a reflection of your characteristics. It may simply be that there are no funds available and trying again may be the thing to do.

Although this news may not make life less complicated for low deposit borrowers, we need to re-iterate that a large percentage of the clients we are helping are still First Home Buyers, Banks are lending above 80%,  and there are options and solutions around moving forward. In the hope of restoring confidence we have below listed some top tips for sourcing finance and preparing for borrowing in this space.

    • See a Registered Financial Advisor (us) as we have up to date market information, specialise in Home Loans, save you time sitting with all of the lenders and money given discounts we can get, and give direction
    • Operate your accounts well. Keep them within their limits, and avoid dishonours and unarranged overdraft fees
    • Save regularly into an account you don’t touch. If you are saving for separate purposes, have different accounts for each purpose
    • Minimise short term debt. Ask us for advice around whether to repay and reduce your outgoings or leave it in place and therefore have more deposit. One size does not fit all
    • Show stability in your place of work and residence. Moving around a lot, although sometimes unavoidable in Christchurch currently doesn’t give the bank confidence in finding you if things go wrong
    • Sign up for Kiwisaver and enrol your kids. There are First Home options and benefits for being a member. Ask us how and what
    • Ask for advice from us  in regard to support from family. There are guarantee and surety loan options available to those who have family willing to assist

As always it’s better to know how you can get there if it it’s not right now, and as always we are here to help.

The property market has certainly picked up over spring, however there is a lot of comment around the LVR restrictions imposed by the Reserve Bank in October 2013, and its effectiveness in dampening the market.

The LVR restrictions imposed were designed to slow the market and reduce the exposure of first home buyers if the market was to fall.  In September 2013, 80% + LVR lending accounted for 25% of all lending, and this was expected to climb.  The restrictions meant that 80% + LVR lending could not exceed 10% of a lender’s total loans.  The result is that 80% + LVR lending is now running at 8.4% of total lending.

As a result of the restrictions, those most affected were first home buyers who had trouble raising sufficient deposit to enter the market.  This in turn opened the door to property investors as there was less competition for homes in the lower price ranges.  Property investors were able to increase their portfolios at the expense of first home buyers.

In the meantime property values have continued to rise bringing into question the Reserve Bank’s decision to impose LVR restrictions.  However there has until now been a cooling of the market in relation to new listings that may be due to restrictions in the LVR.

If the LVR restrictions were to continue, this would further exacerbate the plight of first home buyers who have been shut out of the market.  Young couples without sufficient deposits would be facing a lifetime of renting, which was not the original intention.  Alternatively both lenders and borrowers have become more creative in structuring loans around security offered by generous parents.

There is speculation that the lending restrictions will be relaxed and this is the subject of a select committee hearing to be heard on 11 November.

The general feeling in the market is that the LVR restrictions have not had the desired impact, and that market forces will create a more level playing field in future.  Markets adapt and we are seeing development on the fringe of our larger cities, like the new builds in Pokeno south of the Bombay Hill.  We may see a growing trend of the baby boomers cashing up and moving to the provinces.  This could ultimately stabilize prices as more properties come to market for this reason.

We are seeing the resurrection of some less desirable areas as people focus on value for money and quality of housing stock.  Ex state housing areas offer solid homes in handy areas.  In Pomare in the Hutt Valley complete blocks of state housing have been demolished to make way for new builds at competitive prices. 

Those returning from overseas or migrating to New Zealand will always create a demand for property in areas of high employment.

It is, as always, a question of supply and demand.  This over time will have a levelling effect, and is an effective way in self-regulating the market, rather than Reserve Bank intervention. 

October's Property Gazette

Published by Scott Miller on Monday, October 20, 2014 in

Are you a “Kiwi” Saver?

Last week was Money Week - An opportunity for all New Zealanders to stop and take stock of their financial goals.

As a country, our appetite for trying to understand all things financial is a bit lacking and we could all do with being a little more interested and informed and therefore help ourselves to take control of our financial futures. This includes understanding how to structure our lending to make it work for us and reduce it faster, and how we save.

As specialist Registered Financial Advisers we are consistently looking to extend our products and services to our new and existing clients without compromising the specialist advice and service we provide.. Along with the recent addition of a Registered Financial Advisor, Bennen Lewis, who specialises in providing risk products, we have all recently undertaken training on providing our clients with class advice in regard to Kiwisaver.  We outsource our products we provide which allows us to have variety, options and specialist companies to use that meet our client’s needs best.

It was interesting to learn that a larger proportion of Kiwisaver contributors are “parked” in a default scheme, initially set up through their employer. Being enrolled in a scheme, certainly has its benefits but many don’t know that the default providers are limited to seven and that there are other options that once you are enrolled and contributing would be beneficial to consider.

Some of the questions you may like to consider are;

Who is your current provider and are they Kiwisaver specialists or a “Jack of All Trades” providing a huge number of products and services to clients by making it easy to have everything in a “one stop shop”?

  • Is my provider proactively or passively managing my investment?
  • What are my provider’s service, fees and returns?
  • What fund am I in and does it suit the type of Investor I am?
  • Is my fund provider New Zealand owned and operated or offshore?
  • Does my provider offer a life stages option where my investment fund is changed based on my age?
  • Do I understand that my Kiwisaver funds are held by Public Trust, as Supervisor of your investment no matter my scheme?

How many of us have opted in and simply forgotten about it?

Taken the following statistics it is something we shouldn't have!



Assumptions

Both investors start saving at age 20 on salaries of $30,000.00 pa each and remain employed until retirement age of 65. No withdrawals are made.

Their salaries grow by 3% pa and they earn 4% or 6% pa return after tax, fees and expenses. Inflation is assumed to average 2% pa

The investors and their employers each contribute 3% if the investor’s before tax pay into the investors Kiwisaver account

The employer’s contributions are net of employer’s superannuation contribution tax at current rates.      

Post Election Market

The election result is now known and the status quo remains with pre-election nervousness disappearing.  This should inject some confidence back into the housing market as things such as a capital gains tax are not likely to come to fruition for the time being, and those that were waiting to see what happened can now move forward.

There was a pre-election lull in relation to new home consents and market commentators are expecting activity to pick up before the end of the year.  Strong demand for homes in Auckland and Canterbury are expected to drive demand for the building sector in the next couple of years.  It is interesting to note a rise in consents for new apartments.  These consents have risen form 4% in 2010 to now make up 12% of total consents.  This figure is buoyed by growth in the retirement village sector.

The Reserve Bank made no change to the Official Cash Rate in September, with the next review due 31 October.  This provides ongoing stability to the market, and we have seen the continuation of some good fixed interest mortgage interest rates especially for one and two years.

There is some relaxation from the banks in relation to lending criteria creating more interest from first home buyers and increased confidence generally.

A softening of the New Zealand dollar may also provide stimulation to the market as residential property becomes more affordable to those returning home from overseas or migrating to New Zealand.

All in all, with the election behind us and some positive signals from the lenders, and hopefully some good weather as well, we see the market picking up over the spring and summer.

The Main Centres

The Auckland region as a whole saw residential property values increase by 1.8% over the past three months and 10.3% year on year. Whilst values are still rising, the rate of growth has decreased significantly, probably due the effect of the winter and the build up to the election.  Spring traditionally provides buoyancy back to the market with increased listings and buyer interest.

Residential property values in Hamilton City decreased by 0.9% over the past three months, however they have increased 2.7% year on year. In Tauranga City home values have remained stable with a 0.0% change over the past three months but they have increased 4.5% year on year.  The Tauranga market benefits from migration from Auckland and Christchurch.

Home values in the Wellington Region are still showing a slight downward trend, decreasing 0.9% over the past three months and values across the region as a whole are up only 0.3% since September last year.

In Christchurch City home values have increased 0.3% over the past three months and they are 5.1% higher than in August last year. Home values in Dunedin City have increased by 0.3% over the past three months and 1.7% year on year.
 
The Regions

Values in the provincial centres are variable while many are decreasing or flat and there are a few areas where residential property values have increased. Fonterra’s lower dairy pay out may have an impact on the housing market in the provincial areas.

Property Gazette - October

Published by Scott Miller on Monday, October 07, 2013 in

This month we are starting to see the impact of the Reserve Banks implementation of the 20% minimum deposit rules. You will probably be aware of ASB's decision to cancel all of the preapproved loans where the deposit was less than 20%. Fortunately no other lender has followed.

We will start to see the 'taps' turned on again in the low-deposit space in about 4-5 months as the existing preapprovals work their way through the system. There are of course alternatives - Please contact me on 0508 466 356 to discuss these options.

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 03 October 2013  

                                   Variable                 5.59%  
                                    6 Month Fixed       4.99%
                                     1 Year Fixed         4.95%
                                     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

We have a third of the customers in the nightclub over indulging….. so the bouncers cut all drinks to all patrons…. That doesn’t make sense does it? Certainly not, especially for a mild mannered drinker like myself! I apply this analogy to the recent Reserve Bank rules limiting the amount of loans the banks in NZ can provide to clients who want to borrow more than 80% of the purchase price of a property.   

While the Auckland property market continues to be extremely buoyant, the rest of the NZ property market was shuffling along, (accepting that Christchurch has some earthquake related price issues).

As such the recent above moves do not make any sense for two thirds of the country, that said Mr Wheeler (Governor of the Reserve Bank of NZ) has shot his cannon so to speak and we all have to deal with the fallout (interesting to note the government are distancing themselves from the decision, stating that it is a Reserve Bank decision they have no jurisdiction over!).

The fallout is hurting Kiwis across the country as first home buyers are coming to the realisation that they now need to save a heck of a lot money as a deposit to get into a property or rely on accommodating parents who will act as guarantors for them. Over the weekend I added the following page to the Advanced Mortgage Solutions Website to help those wanting to purchase a property with less than a 20% deposit saved.

The pain is somewhat offset by the government sponsored Welcome Home Loan, which allows a 10% deposit of a purchase price, however it does come with a number of “caveats” around who can qualify, as such never more has the services of a quality Adviser (like us) been required, to provide guidance to clients through the current mortgage landscape.

The above change should see interest rates steady for the balance of 2013, however as mentioned last month, longer term fixed rate money has already shot up considerably, jumping up circa 0.75% over the past two months. Please do talk to us now; our advice has never been more important!


What’s Hot

The ability to borrow 85% of the purchase price of the property! There are currently 2 banks in NZ providing this product, although the criteria are tight! There is also one non-bank lender currently providing finance to 90% of the purchase price, they are “red hot” right now!     

Deal of the Month

Ahhh, the 2pm call from a desperate Real Estate agent. Can you help my client, finance expires at 4pm today and they have been declined….. ! Last month we saved a deal on the death knell for an agent due to our access to the above products – don’t wait - have your clients call us now!

I look forward to hearing from you with any questions you may have.

Mortgage Brokers Christchurch - July's property Gazette

Published by Scott Miller on Saturday, July 06, 2013 in

Freezing cold Antarctic storms followed by unseasonal warm weather seems to emulate what's happening in the property market at the moment.

The pressure from the Reserve Bank around limiting the number of high loan to value ratio loans being written is taking effect. I have found less 95% deals are now getting across the line, hurting the first home buyer. Products like KiwiSaver and the First Home Subsidy (from Housing New Zealand) are going some way to help counteract this pressure.

On the other hand house prices are still trending up higher due to the lack of properties for sale on the market. There is little sign of this slowing down, however it appears 'plans' are slowly being put in place by the Government to help alleviate the situation.

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 05 July 2013

                                              Variable                  5.59%  
                                              6 Month Fixed        4.99%
                                              1 Year Fixed           4.95%
                                              2 Year Fixed           5.15%
                                              3 Year Fixed           5.65%
                                              4 Year Fixed           5.85%    
                                              5 Year Fixed           6.15%


Interest Rate Outlook

Is the end of low interest rates in sight? We, of course don’t know, but there are some signs that the worm might be starting to turn and let’s face it, it has to at some stage. The interest rate environment over the last few years has been one of record lows, both here and abroad. However in the USA we have seen the Federal Reserve set out a timetable for winding down its government held low interest rates. This has seen wholesale interest rates for longer term rise which generally leads to retail rates following.
 
Locally, the economy has a firmer feel and you could label it as moving from recovery to expansion. There is now a lot of ‘ticks’ in the positive side of the ledger, and momentum is becoming more self-fulfilling as a result. Despite this we do not suggest getting carried away, we still have a number of head winds such as currency exchange risks that we need to look out for.
 
Meanwhile housing supply shortages and the lowest mortgage interest rates in almost 50 years are underpinning a rising housing price market, however we are a little wary of a nationwide housing market given on going stretched household affordability. The high NZD will mean the RBNZ should shy away from raising the Official Cash Rate as long as possible. Rising residential investment activity and an additional 39,000 houses for Auckland over the next three years will eventually help reduce pressure on prices, but a nervous wait lies ahead.
 
Variable Interest rates have not changed since our last communication. However, as I have mentioned several times over the last couple of months longer term wholesale interest rates have risen sharply, pushing 2, 3, 4 & 5 year money upwards. Looking ahead, given the likelihood that rates will continue to rise, borrowers would do well to consider fixing. Selecting a term depends on how quickly you believe interest rates might rise versus one’s appetite for the extra cost. We favour a spread of terms, with an emphasis on 2 to 3 years as perhaps offering the best current value. As always please sit down with us though to discuss the option most relevant to your circumstances. I suggest this to take place sooner rather than later as rates are on the move.

What's Hot

Locking your money down! With the movement in longer term money market rates, a lot of our clients who have been on variable rates are rushing to lock their funds down at decent interest rates while they still can. If you are unsure, call us and we can talk through your options.
 

Deal of the Month

As the flow of funds starts to ease up we are finding more “2nd tier” options available at  affordable rates, and Lo-Doc products are coming back to the market - Call us we deliver!

Mortgage Brokers Christchurch - Property Gazette - April

Published by Scott Miller on Thursday, April 04, 2013 in

 

 

The fantastic summer weather we have been enjoying appears to be continuing into autumn. House prices continue to increase and time to sell a property continues to decrease. As far as I can tell there is no slowing in this process and it seems to be set to continue for some time yet.

On a personal note I am competing in the 101km, 2013 edition of the Graperide up in Blenheim this weekend with a couple of friends. Something I am looking forward to, let's hope the weather stays fine.

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 2 April 2013 

                     Variable                     5.55%  

                     6 Month Fixed            5.10%

                     1 Year Fixed              4.95%

                     2 Year Fixed              5.30%

                     3 Year Fixed              5.49%

                     5 Year Fixed              5.65%

Interest Rate Outlook

A rift is brewing in the mind of Reserve Bank Governor, Graeme Wheeler. On one hand, he is keen to see the overall economic growth we are enjoying continue; on the other, he is rightly concerned by the highest level of house price inflation since 2007. Because of this, he is investigating rarely-seen alternatives to lifting interest rates, to try and stem spiralling house prices (particularly in Auckland and Christchurch).

He doesn't have many options, but two being considered are: increasing the size of the deposit needed to buy a house from 5% to 10, 15 or even 20%; or forcing New Zealand banks to hold a higher level of funds on deposit for every dollar they lend out.

A move to increase the required deposit for a house purchase would surely slow the property market down, but could be political suicide, as you’d expect a nasty backlash from consumers, especially first home buyers. The easier option may be to force banks to hold a greater level of capital in reserve, which would push interest rates up: lenders would be forced to attract more people to saving through term deposits, for example, and this could increase the amount of money available to lend, as all lenders would be doing the same. Additionally, it wouldn’t impact interest rates in other areas of the economy or the exchange rate. This may be a less risky political move for the Reserve Bank to make, although it would come under a lot of pressure from the big banks to not do so. It may come down to a case of who the government is less scared of: the voting public or the big banks.

Interest rates remain at record lows, with fluctuation occurring as different banks offer different “specials” in an attempt to grab some market share. The current “hot” one-year rates available (we regularly see these under 5% once discounted) have a lot of appeal, but consideration should also be given to the lowest ever long-term rates on offer, with three- to five-year rates sitting in the mid- to high-5% range. These provide excellent stability at affordable rates, and will look very attractive in two years’ time.  
         
What’s Hot

Get a free check on what you are paying for house, contents and car insurance. We now have access to leading New Zealand insurer, Tower Insurance, and can provide an obligation-free quote on your client’s general insurance needs, potentially saving them hundreds. Refer your clients now!
 
Deal of the Month

We recently came across some investors who were happily set up with their bank, quite oblivious to the fact that their investment debt was on a principal and interest payment structure while they still had personal debt. Their investment debt should have been interest-only, in order to maximise the tax benefits, and so we restructured it and have saved them thousands in tax. Call us - we deliver!

Mortgage Brokers Christchurch - Property Gazette - March

Published by Scott Miller on Thursday, March 07, 2013 in

 

Purchasing property over the February/March period has continued to increase as have the amount of properties for sale, however more properties on the market would help matters. The largest amount of feedback I am receiving from clients is there just isn't enough property to go around.

For those looking to purchase in Christchurch or Auckland this seems only to be set to get worse - My advice, keep looking - something will come along!

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 7 March 2013


Variable             5.55%
6 Month Fixed    5.10%
1 Year Fixed      4.89%
2 Year Fixed      5.35%
3 Year Fixed      5.39%
5 Year Fixed      5.75%


The old saying “It starts in Auckland and then spreads down the country” looks to be ringing true with recent housing market data seeing a broadening strength of house sales across the regions in New Zealand. Mortgage approval numbers continue to rise adding further fuel to the building momentum in the property market.
 
The only concern to this is the increased level of commentary from the Reserve Bank who seem to want to hold interest rates low to stimulate growth across the country while not wanting to see the property market become too heated, which you could argue has already occurred in the “big smoke”.
 
They only have a couple of levers they can pull. One being interest rates and of course the other being to bring in restrictions around the loan to value ratio they allow banks to lend on homes. The latter could be politically be a very dangerous move, particularly if as suggested it is aimed at the region of Auckland.
 
Economic growth does appear to be finally kicking in with many economists predicting consistent growth of between 2.50% to 3% over the next 2 years. This growth may be enough to keep the Reserve Bank at bay in relation to keeping interest rates unchained for the foreseeable future. However, we suggest now is a good time for you to have your eyes and ears open as changes could be afoot in the not too distant future. We lean toward the Reserve Bank falling back on its more traditional control mechanism so watching interest rates over the course of 2013 could be advantageous.
 
Which brings us to our current borrowing strategy, with competition among the banks heating up in the 2 & 3 year fixed brackets there are some striking deals there at present, we have seen 2 year rates at 4.99% and 3 year at 5.39%, how can that be a bad price? Personally this writer favours them. As always though give us a call, as everyone’s circumstances are different.

What's Hot

Well it’s not hot but you need to know about it. ANZ have lead the charge and nothing surer their competitors will be right on their heels, with the Bank now controlling the valuation process, as such you or the client will no longer be able to choose the valuer you want to value a security property. It is designed to protect the bank and consumers but will slow the process.  

Deal of the Month

Last month we helped a client into another investment property when he had been told NO by his existing bank. He had only been self-employed for 7 months but with well put together interim financials and some good supporting information we were able to get him not only approved by an interest rate of 4.99% fixed for 2 years, he was a very happy man - Call us we deliver!

Mortgage Brokers Christchurch - December's Property Gazette

Published by Scott Miller on Monday, December 03, 2012 in


Current Interest Rates as at 01 December 2012  

 Variable                     5.55%  
6 Month Fixed            4.95%
1 Year Fixed              4.95%
2 Year Fixed              5.15%
3 Year Fixed              5.60%
5 Year Fixed              5.99%

Interest Rate Outlook

Variable interest rates are at a record 48 year low while shorter term fixed rates such as 1 year are at an all-time low being the lowest they have ever been since fixed rates were introduced.
 
While house sales and building permit consents are at a 5 year high and the number of days for houses to sell at a record low of 31 days in some markets (namely Auckland and Christchurch).
 
On top of this the last 2 months have seen positive long term permanent immigration reversing the trend of the previous 12 months.
 
These positive trends are being supported by new government initiatives recently announced whereby government will be working closely with local councils to increase the amount of available land for residential use. Government has also committed to increased funding for roads, water & waste facilities to such development opportunities. This coupled with resource management reform will speed up the time it takes to obtain consents as well as provide more certainty for developers to act will certainly help increase the available stock and therefore affordability.
 
In terms of the most advisable interest rate option currently, there really aren’t any bad choices, although we seriously question the value of variable rates at present with all fixed rates out to 3 years the same or lower than the variable rate. Short term money of 6 or 12 months is as low as 4.95% which could be great for those trying to free up some extra cash for Christmas, although if possible the far smarter option is to take the opportunity of lower interest rates to make higher than required mortgage payments greatly reducing the term of your loan and thus the amount of interest you are charged – everyone’s circumstance are different so clients are best to talk to us.

What's Hot

The Christmas rush is on as many clients look to get themselves into a new property prior to Christmas. We’ve had a fantastic year in business and it is in no small way thanks to you & your support. Thanks again for your referrals they are greatly appreciated & not taken for granted.

Deal of the Month

We now have access to a genuine “Lo Doc” lender, whereby self-employed clients who are unable to provide up to date financials can still obtain a mortgage at competitive market rates, last month we helped 2 clients in this situation - Call us we deliver!

Christchurch Mortgage Brokers - November's Property Gazette

Published by Scott Miller on Tuesday, November 06, 2012 in

 

Current Interest Rates as at 05 November 2012

Variable               5.60%  
6 Month Fixed      4.95%
1 Year Fixed        4.95%
2 Year Fixed        5.15%
3 Year Fixed        5.60%
4 Year Fixed        5.99%
5 Year Fixed        5.99%
 

Interest Rate Outlook

The growth we enjoyed in the first half of 2012 has slowed somewhat with most economists predicting a slower second half to the year. The positive spin off to this is that inflation is being held low which should result in a stable interest rate outlook for the next 12 months.
 
While it is stable we certainly do not expect any easing of rates although we did notice that across the ditch they felt compelled to drop their rates slightly. The predicated down-turn in Australian looks like it is finally landing.
The slow-down of the Australian economy, together with the unstable environment in Europe should see us return to positive migration numbers in 2013 which will help push the New Zealand economy in the right direction.
 
Additionally, the rural sector looks to be in for another strong year with many international growing markets facing difficult conditions which will see demand for our produce and dairy provide healthy returns to farmers which will flow through the entire NZ economy.
The housing market continues to suffer from contrasting forces, on-going low interest rates and a lack of quality stock sees prices continue to rise and days to sell shorten, however a genuine lack of stock in the hot Auckland and Christchurch markets is really holding the market back.
 
With the recent merge of NBNZ into the ANZ competition for your mortgage amongst the banks continues to heat up. There are all sorts of weird and wonderful deals being thrown at consumers from Galaxy tablets to cold hard cash and we are seeing interest rates at sub 5% levels for the right clients.
 
We still see the sweet spot in the interest rate cycle as the 2 year point, although for the more conservative clients they seem happy to pay mid 5% and lock it in for a bit longer. Our advice is to talk to us as everyone’s circumstances are different and you really need to make your decision based on your own situation.
 

What’s Hot

When a bank loses a client they call it “churn”, when they gain one from another bank they call it “refinance”, the gloves are off and we are seeing some amazing price deals both interest rate wise and in contribution to costs, call us with your client’s needs we are securing great deals!
 

Deal of the Month

In some instances registered valuations are required, in others they are not, this can actually be the difference between being able to do a deal and not, last month we saved a house purchase for all by financing it with no valuation - Call us we deliver!

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