BORROWERS Mortgage Commentary 09 / 2012
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Issue 2012 / 9   8 June 2012

Welcome to the ninth fortnightly General Finance Mortgage Commentary for 2012.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general. 

The Money Market
This morning (10 am on 7 June 2012) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.56 (up from 2.52)
1 year swap rate    2.45 (up from 2.30)
3 year swap rate    2.68 (up from 2.55)
10 year bond rate   3.24 (down from 3.35)
Kiwi dollar         0.7704 (up from 0.7509)

Rate Decrease Across the Tasman
Earlier this week, the Reserve Bank of Australia decreased their overnight cash rate from 3.75% to 3.50%. Rates so far this year have dropped from 4.75%. The reasons given are the slowing of the Australian and world economies and the falling demand for resources. As a result, mortgage rates have dropped. Wholesale rates have been dropping here, which may well indicate that interest rates may be cut in this country shortly. This is seemly likely. If we do cut rates here, those with floating rate mortgages will see their rates fall further.

Insulating Your Home
In 2009 the National Government, along with the Greens, initiated the scheme, “Warm Up New Zealand” where a subsidised home insulation package was introduced.  For those insulating a home built prior to 2000, the Government provided a subsidiary of up to 33% of the cost. Those on national superannuation and certain other groups could apply for larger subsidies. The scheme to date has been successful, with around 150,000 homes having been insulated. Warm Up New Zealand will end in 2014, so those thinking of insulating their homes, should act sooner rather than later. 

Rental Properties
In the main cities, rental markets have been improving for investors. Rental accommodation is particularly tight in Auckland, due to its rising population and in Christchurch due to its special situation. Mortgage rates are at forty-five year lows and look as if they will stay at these levels for some time yet. Other investment markets, such as shares, are extremely volatile and corporate bonds, government stock and bank deposits all offer low yields. This all points to residential rental property again becoming an attractive choice for investors.  

Bridging Finance 
If you see a property you like, but have not yet sold your current one, then bridging finance may be the answer. This is where you bridge your new purchase until your existing property is sold and longer term finance can then be arranged. We operate in this market, and are happy to do open-ended bridging (i.e. where your existing property has not yet sold). Most banks insist on having an unconditional contact on your existing property. We believe this is all too difficult and that our solution is a better one.

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.