BORROWERS Mortgage Commentary 06 / 2013
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Issue 2013 / 6   26 April 2013

Welcome to the sixth fortnightly General Finance Mortgage Commentary for 2013.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general. 

The Money Market
This afternoon (4 pm on 24 April 2013) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.64 (down from 2.65)
1 year swap rate    2.68 (down from 2.72)
3 year swap rate    2.98 (down from 3.06)
10 year bond rate   3.15 (down from 3.35)
NZ/US dollar      0.8432 (down from 0.8628) 

The Reserve Bank left the Official Cash Rate unchanged at 2.50% this morning. Normally this announcement is made on a Thursday, but for obvious reasons, it has been made a day early. The Governor did say that rates are unlikely to change for the rest of the year, which was predictable. He is concerned about the effect of our high dollar on our tradable sectors and rising house prices, particularly in Auckland. Again, good news with those with mortgages, rates will remain unchanged for the rest of the year. 

Inflation Rate
Our official inflation rate for the past year remains low at around 0.9%. It is at the low end of the Reserve Bank’s inflation target of 1 - 3%. This means that we can allow a little bit more inflation to creep into the system, if this would assist growth or employment opportunities. Compared with other advanced economies around the world, our inflation rate is low.  Australia is at 3.1%, the United Kingdom at 2.7% and the Euro zone at 2.6%. Even the USA has a higher rate at 1.7%. Certainly our higher exchange rate helps to keep our inflation in check.

Apartments More Popular
We are receiving anecdotal evidence from estate agent and clients that increasing interest is returning to the Auckland apartment market. From the onset of the global financial crisis until last year, most apartments were being purchased by investors attracted by the high investment yields. Agents are now telling us that owner-occupiers are returning to this market. This makes sense, as standalone dwellings have been appreciating in Auckland, and so buyers are now looking for value and choice within the apartment sector. 

Short Term Funds Available
We are continuing to receive investment funds from our depositors. As a result we have funds to lend. Our typical loans are for those requiring funds for a one to two year period, in order to tidy up their financial affairs. These are most often debt consolidation loans where we are amalgamating a number of smaller high interest rate borrowings into one. We welcome your enquires.

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.