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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.

The AMS Property Gazette - November

Published by Scott Miller on Sunday, November 14, 2010 in


       Another busy month has gone by and we are only a month and a half away from entering a new year. October saw interest rates remain unchanged by the Reserve Bank Official Cash rate announcement in the last week of the month. This was widely tipped to happen so no real surprises there. We did however get a bit of a surprise in the unemployment figures which dropped by .5%. This is a good result and has been accompanied by many of green arrow stories, with the one acceptation being the Kiwi fruit PSA canker disease.

New Zealand lenders have continued to relax their lending criteria’s around owner occupied purchases. This is great news for first home buyers or people looking to upgrade or down size their existing homes. What is a little disappointing is these improvements have not flowed through to their rental and property investment policies yet, with most lenders still wanting a 20% deposit for standalone rental property purchasers. This of course can be circumvented by using your own home as security bringing the required deposit down to 10%.

Interest Rate Outlook

I believe there is now a light at the end of the tunnel and I’m pretty sure it is not an oncoming train. While economic conditions currently remain subdued, there is a lot that points toward a strong recovery in 2011.

While we are in a period of reasonably flat growth at the moment, many of the important variables required to stimulate market activity are lining up. Firstly, interest rate have stabilised and is giving the market some confidence, for the first time in over two years we are now seeing banks loosen their lending criteria and return with an appetite to lend new money.

With money well priced and the banks keen to again lend I can see that 2011 will provide the right environment for further recovery as the property market looks to rebound from the depressed period of the past two years. Overall households h
ave focussed on clearing debt during this period and many will see the above conditions as ideal to release some of their frustration and take advantage of their improved overall position to move back into property investment, particularly as lenders relax their lending criteria around investment property.

The Reserve Bank has given every indication that interest rates will be held at their current low levels for the immediate future and I do not expect to see any increases in the OCR until March or April 2011. Given current rates have stabilised, it makes choosing the best interest rate option a little more tricky, variable rates are stable and the difference between variable and mid -term fixed rates such as 2 years are around 0.45% with variable rates the cheaper. This makes it a 50/50 call on what decisions is best to take, with people often finding the answer by aligning their personal circumstances with the best interest rate structure available.


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