BORROWERS Mortgage Commentary 13 / 2013
Borrowing Costs
Application Forms
Apply Online
Type of Loans
Like a Loan?
Fortnightly Newsletters
Loan Calculators
Broker Help Zone

Contact us
Switch to Investors

General Finance Mortgage Commentary

Issue 2013 / 13   2 August 2013

Welcome to the thirteenth 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 2 August 2013) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.65 (unchanged)
1 year swap rate    2.88 (up from 2.81)
3 year swap rate    3.67 (up from 3.52)
10 year bond rate   4.23 (up from 4.21)
NZ/US dollar      0.7963 (up from 0.7858) 

Exchange Rate with Australia
Over the past six months we have seen our exchange rate rise rapidly, from around 78 cents to 89 cents, against the Australian dollar. Although it makes holidaying in Australia much easier, it is making things difficult for our exporters.Australia is still our most important export market. Why has this happened? Australia has dropped its official cash rate from over 4.00% to 2.75% (ours is 2.5%) and secondly the outlook for their economy is not as rosy as it has been. There is every likelihood that Australia will cut its cash rate further and it may even go lower than ours. If this occurs, our exchange rate, against that country, may rise even further. This poses problems for us, and we may even have to cut our cash rate to ease back our currency.  If we did this, mortgage rates would likely drop and further stimulate the Auckland housing market. This is an interesting dilemma for the Reserve Bank, as we cannot allow our exporters to go out of business and further increase our unemployment.  

Property Syndications
Property syndications are where proportional ownership in a commercial or rural property is sold to a number of (often more than a hundred) individual investors.  We are surprised that this can be done without a prospectus. For a deposit taking institution such as a bank, a finance company like us or when floating a company on the stock exchange, a prospectus is required. Property syndication should be no different.  There are a number of risks, such as single property exposure, geographic exposure, and tenant risk which should be disclosed to potential investors. We think that all types of investments should be covered by the same set of rules. 

Let’s do the Research
There has been considerable discussion in the media about whether foreigners, who are neither residents nor citizens, should be disqualified from purchasing residential property in this country.  Two important points have not been clarified - how it will work and just how much of a problem there really is. We do not know exactly what percentage of our residential properties is being sold to foreigners. From what we are seeing in the market place, this figure may well be lower than what is perceived. Others say it is higher.  What is needed are some accurate figures so we can debate this issue and then propose some solutions.

Short Term Finance Available
Currently we have surplus funds available and we are looking for short term loans. We are happy to look at low docs, asset lends and traditional bridging type transactions. All our loans must be secured over residential properties. We look at most locations around this country. Look forward to hearing from you.

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.