BORROWERS Mortgage Commentary 19 / 2012
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Issue 2012 / 18   12 October 2012 

Welcome to the eighteenth 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 (9 am on 12 October 2012) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.67 (up from 2.65)
1 year swap rate    2.58 (up from 2.57)
3 year swap rate    2.79 (down from 2.81)
10 year bond rate   3.52 (up from 3.45)
Kiwi dollar         0.8175 (down from 0.8288)

Housing Market
House values continued to rise in September according to Quotable Value. Over the past year the increase nationally has been 5.3% to $428,308 up from $406,750 the previous year. There are regional differences. Auckland was up 7.2% to $575,797. Hamilton was up 4.1% to $355,334. The low growth areas were Whangarei down 1.7% to $304,299 and Napier down 0.8% to $319,246. Christchurch rose 6.6% to $394,014 but as everyone knows there are special circumstances affecting that city. These are in most cases positive figures. There are many jurisdictions around the globe where houses prices continue to drop, parts of the UK and the USA, Spain and Greece to name a few. 

Body Corporate Rules
Recently the body corporate rules have changed. They have become stricter with the requirement for such things as long term maintenance plans. We believe that it is sensible if you are letting a dwelling, subject to a body corporate, that you include the rules with your tenancy agreement and point out to the new tenants, any important rules such as whether pets are allowed, visitors parking etc. This way, if there are any issues in the future, the tenant cannot say they were not aware of the rules.

Number of Apartments
Apartment living is becoming an increasing option for a number of New Zealanders. It is estimated that there are around 43,000 dwellings classified as apartments in this country. As expected, around two thirds (66%) are located in Auckland and just under a fifth (17%) in Wellington. This is to be expected. Due to the continuing increase in the cost of land, less availability and continued population growth, the number of apartments will continue to grow. Further growth of apartments is expected to occur both on the North Shore and in Manakau.

Pay Landlords Direct
We have advocated that when a tenant is receiving a welfare benefit, Work and Income (WINZ) should pay the rental portion directly to the landlord. This means that the landlord gets his rent on time and should this practice become standard, we believe more landlords would be prepared to let their properties to this sector. Currently we are half way there. In some cases WINZ will agree to pay the landlord directly, but we understand that this cannot be made a condition in the tenancy agreement. This is better than it has been but it does not go the whole way. Budgeting will be easier for these tenants, if they know their largest financial commitment has been paid directly.

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.