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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 - February

Published by Scott Miller on Monday, February 06, 2012 in

        

    Welcome to February's edition of AMS's Property Gazette.

I would like to start by announcing the Advanced Mortgage Solutions has moved! We have now opened an office at 6 Burdale Street, Riccarton Christchurch.

Please click here to see our new address on Google Maps.

The process of finding an office has been a while in the making as the recent earthquakes in Christchurch made it harder to find suitable office space. Please feel free to drop by if you are in the area - I would love to show you around.

  What's happening in February?

Current interest Rates as at 1 February 2012

  Variable                 5.60%  
6 Month Fixed         5.45%
1 Year Fixed            5.55%
2 Year Fixed            5.65%
3 Year Fixed            6.10%
5 Year Fixed            6.90%

Interest Rate Outlook

It would appear that 2012 has kicked off with some continued momentum from late last year as have noticed a broadening trend of being a lot busier over the last 4-5 months.

December continued on the strong trend of November in house sales, with consecutive strong months seeing increases in sales of circa 5% each month. It would appear the extended period of historic low interest rates is finally starting to push some confidence across to property purchases. This, together with the nation waking from its rugby world cup hangover, is driving the strongest level of activity we have seen for a couple of years now.


The Real Estate market is still being held back though by a genuine lack of quality stock across the country (with a particular emphasis in Christchurch) and this is seeing the average days to sell a house drop (now down to 39 days). We believe this will continue to ease further over coming months, giving the market some momentum.

Approximately 60% of Kiwis are currently sitting on a variable rate mortgage, which gives the Reserve Bank great confidence that they can actually influence consumer behaviour with interest rate movements if and when they have to. That said, they have signalled that they do not expect to have to push interest rates up until the 2nd half of this year.

As the 1 & 2 year rates fell in the latter part of 2011, we now see this flattening from the variable rate through to the 2 year fixed rate. As such there is little to no difference between the current variable and 2 year fixed rates. Given that we anticipate small increase in variable money later this year, the current 2 year fixed rate holds appeal for us as a sound borrowing strategy - or for the slightly more adventurous splitting the funding into 2 accounts of part 2 year fixed and part variable will ensure not missing out on any variable rate discounts if they were to come on offer. All in all, quite an attractive time to borrow money!          

What's Hot

2012 has kicked off right where 2011 finished. Competition is hot among the banks for business and right now the rate they are all sharpening is the 2 year fixed. We are seeing cases of 2 year rates being offered as low as 5.49% - that is cheap money! Refer your clients now!


Deal of the Month

Last month we helped a more unusual client request, coming from a 70 year old gent buying a modern retirement unit. He was short of the full purchase price and we were able to fund him on an equity release loan for the shortfall, not requiring any monthly payments - call us we deliver!

 

Property Gazette - December

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

                        Welcome to December's edition of AMS's Property Gazette.

Well here we are at the end of another year, and what a year it has been. Earthquakes, mine explosions, rowing world champs, rugby world cup, shipwrecks, and a general election make up an extreme year of highs and lows.

On a personal note I would like to say thank you to all those who have helped and supported the Canterbury earthquake appeals, without your help many of us Cantabrians would be in a far worse position than we find ourselves.

On a brighter note New Zealand finds itself in the middle of a mini pricing war between the mainstream lenders which is bringing all sorts of goodies for us consumers – please feel free to contact me to find out how you can benefit.

So onto the economic news in New Zealand and around the world.

Current Interest Rates as at 5 December 2011

Variable                5.60%

6 Month Fixed        5.59%

1 Year Fixed           5.55%

2 Year Fixed           5.65%

3 Year Fixed           5.95%

5 Year Fixed           6.95%

 

Interest Rate Outlook

Don’t turn on the news if you want any light relief – even though we got through the election rather painlessly we are still subjected to painful scenes every night. Most of which come from overseas and it is not uncommon to see 3 or more clips of rioting or fighting amongst citizens of the same country.

The financial stress that the world economy is under adds fuel to simmering tensions that run through many countries and right now every day it appears that Europe gets worse, as economic instability spreads from Greece, though Italy, France and even on to the previous impregnable Germany. It is at times like this that the tyranny of distance can be our friend, although while we are removed from the violence we see, we are not removed from the economic pressure the bad debt crisis in Europe is generating.

Fortunately for us all, this pressure has currently resulted in an easing of long term fixed rates and for the first time in some months we saw a reduction of interest rates in the 2 & 3 year fixed periods. How long this will last or whether it will continue is too difficult to know, however it now sees Variable and Fixed Interest rates closer than they have been for some time.

As such, the question that is now common, is should I fix my rates now? There is no right or wrong answer to this question although with 2 year fixed rates now matching variable there is no longer a dollar cost in buying some stability. It is just some flexibility that clients will forgo by locking in now.

The question of will interest rates go even lower is also a hard one to answer, while we are at historic low rates there is no guarantee that if the above European issues worsen that we will not see further interest rate cuts across the world. Given there is so much uncertainty perhaps the best strategy could be splitting your loan into part variable and part fixed at a mid-term rate.    

What’s Hot

It is the season to be silly and the banks are obliging with some crazy deals in the market right now. We are seeing big interest rate discounts off already sharp rates and legal fee contributions exceeding $1,000.00 regularly, talk to us, you will be surprised what we can get from your bank.

Deal of the Month


We’ve seen it before, clients with a history of excellent credit and all of a sudden an event occurs in their life, it may the death of a loved one or business venture failed, all of a sudden their credit is shot – last month we helped a client in this position to secure a home - call us we deliver!

Property Gazette - November

Published by Scott Miller on Thursday, November 03, 2011 in

 

  Welcome to November's edition of AMS's Property Gazette.

So the Rugby World Cup has been won by the All Blacks! Congratulations New Zealand and congratulations the All Blacks, what a wonderful display you put on for us. I don’t know about you but that was one of the most nerve raking games I have ever watched. However a 1 point win is as good as a 20 point win once the final whistle is blown.

It has been widely reported that New Zealand put on a fantastic show and that once again we have been pushed into the world’s spotlight. I believe the benefits of hosting the Rugby World Cup will filter through to our economy for many years to come.

So onto the economic news in New Zealand and around the world.



Current Interest Rates as at 1 November 2011
 
Variable                 5.60%  
6 Month Fixed        5.59%
1 Year Fixed           5.59%
2 Year Fixed           5.89%
3 Year Fixed           6.45%
5 Year Fixed           7.25%
 
Interest Rate Outlook

The world, in economic terms has been doing it tuff now for several years. To once again see more prosperous times, it’s going to take the sum of many moving parts working together to make a difference. There are still those variables we cannot control, (think Referees here) such as the state of the European & American economies, which unfortunately our banks still have to approach for their off-shore funding. We will always be susceptible to their financial stability but more and more New Zealand lenders are trying to limit the amount they need to borrow from offshore, (similar to taking the referees decisions out of the game).

Internally, our economic engine continues to be our rural sector and while commodity prices have come back somewhat the market is still strong. The rural surge is timed nicely with the historically low interest rates allowing farmers to reduce debt, freeing up some internal bank capital. Our beautiful country is also set for a tourism boom on the back of what the world has just seen and this should assist the retail sector continue their strong year on the back of RWC.

So there appears to be money flowing in our economy, we just need to ensure this is best utilised, not unlike the farmers, reduction of debt should possibly be many individual’s focus.

Sustained low interest rates are also helping the housing sector as we see the average days to sell houses continue to drop and many examples of multiple offers being placed properties, a momentum we believe will carry through the traditionally buoyant summer months.  

As for a current borrowing strategy, variable rates look set to remain at current levels through until mid-2012, accordingly, the floating rate looks the best option right now, although 1 year & 18 month rates are practically the same and provide some nice stability of payment. For those prepared to pay a small margin of 0.25% - 0.50% you can now lock in for 2 years.
 
What’s Hot

The annual Spring race for asset growth is on seeing the banks all coming out with some weird & wonderful incentives to convince consumers that they are the best option. The most innovative being a replica RWC if you take a mortgage (and yes we have access).
 
Deal of the Month

Equity solves most problems for banks, last month we funded a lady into a house whereby she had only been in her start up business for 4 months, however with 50% deposit we were able to structure the deal by putting 1 years payments aside and securing the house - call us we deliver!

Property Gazette - October

Published by Scott Miller on Tuesday, October 04, 2011 in

 

Welcome to October's edition of AMS's Property Gazette.


The Rugby World Cup is up and running and although Dan Carter is now out for the rest of the tournament, I think we have a great chance at winning the competition. Despite this distraction real world events keep on moving. Please read on for the latest interest rate and property information.


Current Interest Rates as at 3rd September 2011

 

Variable                 5.60%

6 Month Fixed         5.60%

1 Year Fixed           5.75%

2 Year Fixed           6.20%

3 Year Fixed           6.70%

5 Year Fixed           7.40%
 

Interest Rate Outlook

Occasionally distance can be your friend, and being a little isolated and removed from the debt crisis fallout in Europe is certainly a good thing at this moment.

However while activities in these larger markets do have an impact on our funding cost, the severity of their impact is lessened. Nonetheless, the financial mess that is Europe is likely to see New Zealand’s Official Cash Rate held at its current low level until first quarter of 2012.

Locally, while the property market remains flat it is being readied for a strong 2012 on the back of the Christchurch rebuild and we are already starting to see positive signs in the Auckland market with well-priced houses moving quickly.

Of course we are half way through one of the strongest economic spending booms New Zealand has seen over the last 5 years thanks to the Rugby World Cup. But this spending is fleeting relief at best, and is seen as a temporary good-time blip; however it does clearly add fuel to our positive growth.

With the developing events in Europe one could argue that remaining on the floating interest rate is a good thing. I agree to a point, but only to a point. We have seen massive swings in financial markets recently, with large losses and gains happening almost daily.

However, the above strategy does come with a caveat. You need to keep your eyes and ears open for when interest rates do start to move. New Zealand is experiencing record lows in regards to interest rates and at some point it will be wise to lock in a fixed term before we see sharp rises in interest rates.

What’s Hot

There is only heat on one thing at the moment, the mighty All Blacks, even non rugby followers cannot help but be caught up in the hype that is RWC, and haven’t we as a country done ourselves proud, it is great to see how we have embraced the tournament – Go The AB’s!

Deal of the Month

Last month I had a client who had a black marks on their credit check & had been told ‘No’ by a number of banks, I managed to paint a clear picture of the circumstances for the bank and had her approved before long, saving a house sale for our referring agent - call us we deliver!

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!

Advanced Mortgage Solutions - Property Gazette - August

Published by Scott Miller on Wednesday, August 10, 2011 in


      Firstly I would like to apologise for this month’s Property Gazette coming to you a little later than normal. There has been a lot going on this month with the United States being down grade to a AA+ credit rating, a lot of talk around the pressures on the Official Cash Rate, and the New Zealand Mortgage Broker Association’s annual conference being held on the 4th and 5th of August.

So what has been happening this month?


Current Interest Rates as at 1 August 2011 
 
Variable                       5.75%  
6 Month Fixed            5.65%
1 Year Fixed                5.75%
2 Year Fixed                6.20%
3 Year Fixed                6.70%
5 Year Fixed                7.45%

 
Interest Rate Outlook
 
Should I stay or should I go now? If I go there could be trouble, if I stay there could be double....


This rock song classic by the Clash sums up consumers’ attitudes toward interest rates at the moment. Should I fix now or should I stay floating?


The consensus of most is that you should fix your interest rates soon (maybe over the next month or so).

 

But when?

 

Should you do it now or can you squeeze another month or two out at these basement rates of under 6%?

 

Personally I am of the opinion of that “it’s better to be safe than sorry”. It is almost impossible to pick the last day of the cheapest floating rate available, but if you look to fix shortly you are guaranteed to fix in a current fixed interest rate that is tipped to go up.

 

I am able to negotiation with lenders good margins off all fixed interest rates terms at the moment. This won’t last forever as the pressure on rates is to go up, so please consider contacting me when it is convenient.


 As the bank economists sat glued to their iPads, iPhones, Blackberries for Reserve Bank Governor Alan Bollard’s address on July 28th, most were left none the wiser as to whether now is the right time to lock in. Dr Bollard certainly has indicated that rates are going to rise this year, although exactly when nobody is sure.

You get the impression he would like to move now but is very concerned about the strength of our currency (or more so the weakness of the US, and now the credit rating drop) and this may be the sole factor in holding rates back to their current level. As such it doesn’t really put us in control of our own destiny when it comes to rates as we are reacting to events in the US & Europe as their debt crisis worsens.

My pick is he may not move in September but is more likely to do so on October 27th (the next OCR announcement) and the move could be as high as 0.50%. Be aware that as the demand for fixed rates increases, so may the price, and I would not be surprised to see fixed interest rates move higher before the variable rate moves.

My advice is to not be too greedy now as it may cost you in the future. It may be worth considering locking in part or all of your mortgage in the next month or so because, let’s face it, interest rates sub 7% locked away for a period of time is a good thing. 

 
What’s Hot

Fixing your interest rate! As many of our customers get nervous they are flocking from variable interest rates into fixed rates. Nobody knows when but at some stage this year rates are going to rise and often it is the fixed rates that move before the variable, so fixing now does make sense.

 
Deal of the Month

Getting by with a little help from Mum & Dad, last month we 100% funded a young couple into their first home, yes Mum & Dad acted as guarantors but they are only responsible for 20% of the value of the home & the young couple can comfortably afford the debt - Call us we deliver!

Advanced Mortgage Solutions - Property Gazette - July

Published by Scott Miller on Monday, July 04, 2011 in



Current Interest Rates as at 1 July 2011 

 
Variable                      5.40%  
6 Month Fixed              5.59%
1 Year Fixed                5.55%
2 Year Fixed                6.20%
3 Year Fixed                6.70%
5 Year Fixed                7.45%
 

Interest Rate Outlook

You can’t help but think that we might actually be our own worst enemies in slowing the economic recovery. There are so many variables that indicate we are set for strong growth but they have been this way for a while now.

We have a market shortage of quality properties on the market, those that hit the market well priced are snapped up and market rents are rising which will surely start to push people toward buying. We also have a whole new wave of potential buyers hitting market as KiwiSaver matures to a point that allows consumers to withdraw their and their employer’s contributions, as well as qualifying for the government first home buyer’s grant of $1,000.00 per year for every year you have been in the scheme.


So what is holding us back? Confidence or more to the point a lack of it, as a nation we are still sitting on our hands, afraid to spend, afraid to take a step and it is this lack of activity together with a net outflow in terms of migration that is holding our economy back. We just need a little more activity and demand and the market can get some momentum which it sorely needs.


Mortgage approvals are up just over 10% on 2010 so this is a good indicator and as soon as the rural sector actually starts spending their 2nd consecutive record pay-out as opposed to focussing solely on reducing debt the quicker the economic recovery will kick in.

In relation to our recommended borrowing strategy we hold a similar view to last month, we have no doubt that we will see rate increases in the last quarter of this year and as such feel that the shorter term fixed rates probably offer the best value as there is little differential between variable and 1 year or 18 month fixed rates. For those a little more risk adverse we suggest the 2 year rate still offers good value at less than 1% above current variable rates, as long as you realise you pay a small premium now to buy some security.        

 
What’s Hot

KiwiSaver, it has now reached the stage where consumers who have been in their Kiwi Saver for 3 years can withdraw their and their employers contributions together with a first home buyers grant from the government puts many of these people in a position to buy their first home.
 
Deal of the Month

Last month we helped a couple with 3 teenage kids restore control to their finances, things had got out of control over the past few years with them racking up 2 credit cards and 2 personal loans, we refinanced it all into one, saving them $500.00 per month - Call us we deliver!

Scott Miller - Quoted in the Press Newspaper

Published by Scott Miller on Wednesday, May 11, 2011 in
  This article was published on the front page of the Press on the 11th May 2011. I was quoted from the perspective of being the owner of Advanced Mortgage Solutions, a mortgage broking company operating in Christchurch post earthquakes.

 

Real estate market split by quake

Buyers are shunning homes in eastern Christchurch as the effects of the earthquakes split the housing market.

Sales in the hardest-hit suburbs have slowed to a trickle, with so few recorded that valuation agency QV has been unable to measure trends in values.

In Sumner, Chris Milne can neither sell nor rent his undamaged beachfront apartment.

He bought the property to rent out now and retire in later, but even halving the rent drew no tenants.

The apartment is for sale, with an asking price less than its 2007 rating valuation.

Open homes have drawn a blank.

"Nobody turned up," Milne said. "People are just reluctant to live out this way.

"They seem to be worried about the portaloos, the damaged roads and the traffic jams, but it's certainly no worse here than anywhere else."

He said the Sumner real estate agents had left.

Real estate agent Tim Dunningham, of Min Sarginson, said the market around Lyttelton Harbour had "just gone dead", even as far away as Diamond Harbour and Church Bay.

"We've actually had almost no damage over here, but we are finding there are no buyers and no interest whatever. It's very frustrating," he said.

"People are rushing to buy houses in Rolleston, forgetting that's near where the first big earthquake was centred."

Melanie Swallow, of QV Valuations, said some house sales had been a knee-jerk reaction to the February quake and the initial flurry of activity was settling down.

She said buying patterns were in some cases based on perceptions of certain suburbs and not facts.

There had been "strong interest" in homes in the northwestern suburbs and in towns in the Selwyn and Waimakariri districts, as long as they were not overpriced.

There was no indication prices in any areas had fallen, Swallow said. Lack of job security had slowed the move of homeowners from first to second homes, she said.

Real Estate Institute figures show that about 80 per cent of Christchurch house sales in March were in the western half of the city.

Prices since the February quake were up compared with a year ago in North Canterbury and in Christchurch suburbs such as Bryndwr, Burnside and Riccarton.

Few sales have been recorded in the eastern and hill suburbs.

Mortgage broker Scott Miller, of Advance Mortgage Solutions, said most sales were now on the west side of town, but buyers in the hardest-hit areas were having no trouble getting loans.

"We've actually had more success getting borrowers across the line than after September, as long as there's replacement insurance."

He said lenders did not always require engineering reports.

The quakes had affected business for mortgage brokers, and he had heard of some having to find ways to supplement their income.

Christchurch's housing market has had its quietest period on record since the February quake, with homes selling at a rate of about six a day in the weeks afterwards.

 

 

Advanced Mortgage Solutions | Property Gazette - May

Published by Scott Miller on Monday, May 02, 2011 in


 
Interest Rate Outlook

Current Interest Rates

Rates offered are the best of standard, carded interest rates available and do not reflect any discounts your Advisor may be able to obtain for your client. Rates are correct as at 02/5/11.

Variable

5.40%

6 Month Fixed

5.59%

1 Year Fixed

5.55%

2 Year Fixed

6.20%

3 Year Fixed

6.70%

5 Year Fixed

7.45%

These current interest rates sure are nice & cosy, keeping our wallets warm as temperatures start to drop across the country. The Reserve bank last week threw another log on the fire by keeping the official cash rate at its record low of 2.50% allowing the above attractive variable interest rate to remain in place, not only was the rate held but governor Alan Bollard's comments lead most economists to believe that there will be no increase until late this year, if at all and possibly not until the first quarter of 2012.

Of course this all depends on how well and quickly the economy rebounds and it will, as we are coming off historic lows in many sectors. It is this area where caution should be exercised and clients need to remain alert because once the recovery gains momentum we could see interest rates moving quite quickly.

The housing market is already starting to show signs of life with the engine of the Kiwi economy, Auckland, gaining some good momentum through March & April, albeit off the trough of late last year, as this increased activity gathers speed we do believe that property sale numbers will continue to rise & spread across most parts of the country.

The second area of concern for the Reserve Bank will be inflation which is being held in check by consumers continued reluctance to spend on anything other than essential items and it is these items that we have little control over in terms of cost. If inflation were to be measured solely on the essential items such as petrol, electricity, rates & food it would be deemed to be well & truly above the 3% threshold government has set as being manageable.

As such when the housing momentum takes hold and consumer confidence increases resulting in more spending on non essential items we believe inflation will come under pressure, it is at this point in time the Reserve Bank will act swiftly and this could result in a series of Interest rate increases starting sometime in the 4th quarter of this year and continuing through the first half of 2012, accordingly, we do share a word of warning for consumers to keep their eyes & ears open as to interest rate movements because when they start they may continue for 3 or 4 consecutive reviews.

This of course brings us to a recommended borrowing strategy, while the variable interest rate is clearly the cheapest rate on offer and should continue to be so for the baulk of the rest of 2011 be on your toes and prepared to lock in at the first sign of movements, even locking in @ low 6% rates for 18 months or 2 years now could look a very attractive option come early 2012. There is no escaping the fact that if you want certainty in your interest rates you will have to pay a small premium for the peace of mind.

What's Hot

The banks continue to ever so slowly but surely open their credit window wider, just last week we had a main stream bank increase their loan to value ratio for owner occupied property owners back out to 95% which is even available on refinance proposals.

Deal of the Month

A client came to us last month requesting we refinance his investment property loan as he was struggling to maintain the payments. It wasn't the mortgage that was causing this it was his consumer debt, we consolidated his mortgage, car loan & 2 hire purchases which reduced his monthly commitments by over $500.00 - Call us we deliver!


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