BORROWERS Mortgage Commentary 14 / 2013
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General Finance Mortgage Commentary

Issue 2013 / 14   16 August 2013

Welcome to the fourteenth 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 16 August 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    2.98 (up from 2.88)
3 year swap rate    3.90 (up from 3.67)
10 year bond rate   4.48 (up from 4.23)
NZ/US dollar      0.8050 (up from 0.7963)

LVR Restrictions
The Reserve Bank is seeking market input on proposed loan-to-value ratio (LVR) restrictions. It may prohibit all loans over 80 or 85% of the property’s value. Our view is that this will hurt the group who should be purchasing houses - the first home buyer. It will not stop the investors and speculators, as most of these buyers have other properties or assets to leverage off, and they will be able stay below the prescribed LVR limits. Non residents or foreigners are generally well cashed up so the proposed changes are unlikely to affect them. It appears that LVR restrictions will do more harm than good. They are not the answer. 

Extending the Anti-money Laundering Laws
Those in the financial services industries (bankers, brokers, and advisors) are aware that we are now subject to fairly tough anti-money laundering legislation. The public is also bearing the burden of this, by being asked to provide more personal identification, when involved in financial transactions.  The Government is looking at extending these laws to cover lawyers, accountants and real estate agents. We believe that it is in the public interest that they should be included, as it provides a level playing field, and regulatory oversight, for all those engaged with clients’ financial transactions. 

Excessive Council Rates
Aucklanders are currently receiving their rates notices. The council has stated that the average increase is only 2.9%, but in the old Auckland City council area many are facing increases considerably higher than this. The maximum increase has been capped at 10%. This is on top of similar increases last year.  There is something not quite right here.  The new greater Auckland council was supposed to bring economies of scale and rationalise staffing. If this was occurring, even with some major projects, rates should be staying at roughly the same levels as 2010/11. They have not, despite inflation (over the last 12 months) being less than 1%. What is needed is for our elected representatives to be a lot more vigilant in controlling council expenditure. 

New Prospectus
General Finance is a non-bank deposit taker. We obtain funds from the public and on-lend these funds for short term and bridging loans.  Our new prospectus arrived from the printers last week. Our flagship rate is 6.25% for two years. Most interest is paid quarterly, however for amounts of over $10,000 you have the option to receive your interest monthly. To invest with us, call us on 09 526 7801 to request a prospectus and investment statement, or go to our website at  We appreciate your enquiries.

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.