BORROWERS Mortgage Commentary 09 / 2013
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General Finance Mortgage Commentary

Issue 2013 / 9   7 June 2013

Welcome to the ninth 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 morning (9am on 7 June 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    2.72 (down from 2.73)
3 year swap rate    3.15 (up from 3.12)
10 year bond rate   3.59 (up from 3.48)
NZ/US dollar      0.8020 (down from 0.8135)

Are Trusts Still Necessary?
In the 1990s and 2000s it almost became fashionable to transfer your assets to a family trust. Many were doing this. There are many reasons for family trusts (estate planning, relationship property issues, creditor protection), but how necessary are they? This varies according to each individual’s personal circumstances. In deciding to have a trust or continuing having one, individuals need to consider the likely costs in both time and money.  While it is wise to have an independent professional trustee in place, they may charge for this, and there are increasingly more documents to be signed by trustees for such things as opening bank accounts, taking out mortgages etc. With the removal of gifting restrictions a few years ago, it is now easier to transfer assets to a trust and it is also easier to wind them up. People have to decide, based on their personal circumstances, what they want to achieve and the costs, and whether a trust is suitable for them.

New Insurance Requirements
For many home owners, from this May onwards, general house insurance (building insurance) rules are changing. Insurers, who have previously provided full replacement policies, will no longer be offering this option.  Home owners will have to provide an exact dollar amount for the insurance they require. You can either use your insurer’s online calculator or seek an independent valuation.  This is a significant change and we suggest that when your renewal time comes, you speak with your insurance broker or company to ascertain exactly how the changes will affect you. 

KiwiSaver and House Buying
First home buyers are realising how useful their KiwiSaver is in assisting them in purchasing their first dwelling. One of the benefits of our KiwiSaver is that accumulated balances can be used to purchase an owner occupied dwelling. This advantage will become more attractive the longer people are in KiwiSaver and the larger their balances are. If a couple is purchasing a property and both are in KiwiSaver, then their savings can be pooled. The important issue here, is to talk with your savings provider before you purchase your house and ascertain exactly what the rules are and how long it will take to access your funds. 

Our Deposit Rates
General Finance is a deposit taker sourcing funds from the general public. Our highest rate is for two and three years at 6.25%. We welcome your enquires and you will note that our rates are higher than corresponding bank rates. Please contact us for a copy of our prospectus.

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.