BORROWERS Mortgage Commentary 07 / 2014
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Issue 2014 / 7   9 May 2014

Welcome to the seventh fortnightly General Finance Mortgage Commentary for 2014.  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 9 May 2014) the money markets were at the following levels:
Official cash rate    3.00% (unchanged)
90 day bill rate       3.32 (up from 3.30)
1 year swap rate    3.66 (down from 3.68)
3 year swap rate    4.15 (down from 4.30)
10 year bond rate   4.28 (down from 4.52)
NZ/US dollar      0.8646 (up from 0.8608)

Rating Revaluations
This year, the Auckland Council will carry out its triennial revaluations of around 525,000 Auckland properties. This includes all types of properties within the greater Auckland area.  Since the last revaluations in 2011, there has been considerable movement in house prices in many areas. Some have increased as much as 40% - e.g. Kingsland, Sunnynook and New Lynn. Most residential areas have seen increases of 20 to 30%. Revaluation notices will be sent out in November of this year but rates will not be impacted until the 2015/16 year. 

Over the past week, the Labour Party has been discussing the use of KiwiSaver as a tool for monetary policy, with the Reserve Bank to be able to change contribution levels. This is likely to cause some confusion.  KiwiSaver should be used for what it was set up for - namely as a personal superannuation plan.  It is useful, however to debate whether it should be compulsory and how much should people contribute. We like its ability to assist first home buyers, with early withdrawals for the purchase a property and we believe it should go further, with KiwiSaver funds becoming another provider of mortgage finance.

Insulation Offer
It is pleasing to see that Energy Action (a Christchurch based charitable trust) is offering free home insulation for Canterbury houses. This offer also includes rental properties. The basic criteria, is that someone in the household is over 65 or under 17 years old or that the occupant has a health condition. This is a good idea, as warmer houses are healthier places. This is particularly positive in Christchurch, which can be damp and cold during the winter months. There is no charge and installation is included.

Asset Lending
At General Finance we are essentially a security lender. This means that, if the asset being offered meets our criteria, we are generally happy to lend. There are a number of borrowers who have had credit issues or have trouble confirming their income but if they can service the propose loan then we are happy to assist. We are willing to consider all types of residential security, including lifestyle blocks. We are happy to go beyond the ten hectares limit which many other lenders seem to impose.

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.