BORROWERS Mortgage Commentary 01 / 2014
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Issue 2014 / 1   14 February 2014 

Welcome to the first fortnightly General Finance Mortgage Commentary for 2014.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market ingeneral.  

The Money Market
This morning (9am on 14 February 2014) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.93 (up from 2.71)
1 year swap rate    3.45 (up from 3.25)
3 year swap rate    4.17 (up from 4.07)
10 year bond rate   4.61 (down from 4.80)
NZ/US dollar      0.8308 (up from 0.8204)

Busier Start to the Year
Various economists and market commentators are predicting that 2014 will be a better year, economically, than 2013. So far, this year, the level of mortgage enquiries has been good.  Last year people were thinking about projects, such as renovating properties or buying a business.  We are seeing more of these thoughts being put into practice. Borrowers feel confident that their properties will continue to appreciate in areas such as Auckland and Christchurch, and in some of the slower markets such as Northland prices have finally bottomed. We expect to see more small property developers come into the market - say subdividing an existing section or building a couple of town houses.  This is also an election year, which has traditionally been better for the economy.

House Prices Will Continue to Appreciate
Contrary the Reserve Banks endeavours to slow house prices, they will continue to increase in Auckland but probably at slightly slower rates. There are several reasons for this. While external migration has been increasing for the past six months, two other factors are at play.  Internal migration, from the rest of the country, is in fact more than external migration and the population is naturally increasing. Greater Auckland now has in excess of one and half million people, so this is significant. New Zealanders returning from overseas often tend to settle in Auckland to take advantage of work opportunities.

Auckland Housing Boom is Spreading
Over the past couple of years, property price increases in Auckland have been largely confined to the inner city suburbs and the lower north shore. Predictably, as prices in these areas rise, potential buyers look to the outer suburbs for value. This has seen houses in the Waitakeres, west of Auckland, appreciate around 19% in the past year. Similarly Manakau City has seen increases of 16% in the same period.   This trend is set to continue and we are likely to see house price rises even further out, in suburbs such as Papatoetoe in the south and up to Orewa in the north.

Asset Lends and Low Docs
We are continuing to offer our range of short term and bridging mortgage facilities. Our maximum term is 2 years and single amount is now $550,000, secured against all types of residential and lifestyle type properties. Our maximum LVR is 70%. We are happy to look at the traditional asset lends, low docs and credit impaired type borrowers. 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.