BORROWERS Mortgage Commentary 09 / 2011
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Issue 2011 / 9   3 June 2011

Welcome to the first fortnightly General Finance Mortgage Commentary for 2011.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general.  Previous issues of this commentary can be found on our website

The Money Market
This morning (9am on 3 June 2011) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.66 (up from 2.65)
1 year swap rate    2.92 (up from 2.82)
3 year swap rate    3.85 (up from 3.75)
10 year bond rate   5.11 (unchanged)
Kiwi dollar         0.8160 (up from 0.7915) 

What Can Trusts Own
Asset protection and the use of trusts is core to an individual’s or family’s estate planning requirements. The question often arises as to what can be owned through a trust or what assets should a trust own. A trust can own anything that an individual can own, but there are some qualifications.  There is little point in a trust owning assets that may depreciate - cars, household chattels and personal items such as clothes.  Trusts are best to own investment assets or those likely to appreciate - property, land, shares, bonds and mortgages, and collectables such as coins and paintings.  A trustee has a duty of care and so all assets held by a trust must be clearly documented, recorded and adequately insured. Putting assets into a trust that may give future claims, against the trust, such as a car or boat (that is driven by an inappropriate third party and say involved in an accident) must be avoided. Trusts are flexible ownership structures and can be an effective means for holding assets.  

Mortgage Problems
If you are in a situation where you cannot meet your mortgage payments (perhaps due to poor trading of your business, a relationship breakdown, redundancy, or sickness) it is important to inform your lender as soon as possible. Lenders are aware that some of these life issues may affect borrowers from time to time. In talking with your lender, if you agree to something such as calling them each fortnight, it is important that you stick with the plan. Make sure the lender can always contact you and you return all calls.  Remember a lender can commence legal proceedings (i.e. a mortgagee sale) if two monthly payments have been missed. If you talk with your lender they may be able to offer other options which will ensure that you keep your property.  These may include switching to interest-only for a period, granting an interest holiday (which in effect means capitalising the interest for a couple of months) or extending the term of the loan.  The most important advice is to keep in contact and work with your lender.  

Checking Out Your Builder
The Department of Building and Housing has launched an online service for licensed building practitioners to record their details and experience on a central register. These practitioners are able to update their details as they change. We believe this is a particularly useful service for those who want to carry out building and alteration work on their property. Home owners can check whether the builder they propose to use is licensed or not and also obtain details on their background. So far 8,300 builders have signed up for the scheme and considerably more are expected to.  Further information can be obtained from the Government website 

Deposit Rates
Our subsidiary company, General Finance Limited, is a deposit taking company. This means it can obtain investment funds from the general public. Our flagship rate is 9% for three years although we offer lower rates for a variety of other terms.  This is well above the 4.0 - 4.75% being offered by the trading banks at the moment. Our finance company can pay interest either monthly or quarterly. A number of banks are offering specials with terms of 120, 150 or 180 days which means that you will receive only one interest payment at the end of the term.  If you wish to invest any funds please contact us - we are happy to assist and provide you with a copy of our prospectus, investment statement and application form.  

Mortgage Interest Rates
For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the General Finance Limited Loan Administration Department.

As everyone's personal circumstances are different and the tax treatment of their affairs is always determined by their own circumstances, you should not act on any comments made in our Commentary without obtaining your own independent professional advice.

General Finance Limited is a Registered Financial Services Provider, with registration number  FSP8882.