Mortgage Commentary 11 / 2014

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Issue 2014 / 11   4 July 2014

Welcome to the eleventh 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 (3.30 pm on 3 July 2014) the money markets were at the following levels:
Official cash rate    3.25% (unchanged)
90 day bill rate       3.65 (up from 3.58)
1 year swap rate    3.93 (up from 3.88)
3 year swap rate    4.41 (up from 4.33)
10 year bond rate   4.44 (up from 4.43)
NZ/US dollar      0.8766 (up from 0.8717)

Three Property Markets
Over the past couple of years the residential market has developed into three distinct tiers. You have Auckland, with growing house prices, led by strong population growth, due to both internal and external immigration.  Christchurch has an active market, with both house prices and rents increasing, due to the large rebuilding programme. In the rest of the country, house prices remain largely flat with little growth. This trend, particularly in Auckland, is likely to continue.  Most countries around the globe generally have one city, called a primate city, that is several times bigger than the next largest. This is happening with Auckland.  

Insurance Changes
Homeowners now realise that obtaining household insurance takes longer and is a more complex process than what it was, just a few years ago. When purchasing a new house, insurance should be obtained early on, in the process. It should not be left to the day of settlement. Insurers now are asking for electrician’s certificates for older dwellings. This may require a physical inspection. Full replacement insurance has gone. You now have to detail the exact insurance quantum you require. A number of insurance companies and brokers have good websites to assist you here. If you are obtaining a registered valuation on your property, ask your valuer to include a separate breakdown for insurance purposes.   

Changing Face of the CBD
Back in 1991, around 1,200 lived in the CBD of Auckland. Most people commuted into the CBD for work and shopping, but outside business and shopping hours, the CBD was like a ghost town.  In the last twenty odd years, this has changed rapidly - the inner city population has increased about twelve fold. We could see, a short time into the future, more people living in the CBD, than actually working there.  Businesses are relocating to the various industrial nodes, such as Albany, Penrose, and Manukau which offer modern premises at cheaper rentals. Residents can now live in the city and work outside it, thanks to the introduction of better public transport choices.  

Open Ending Bridging Finance is Available
The good news is that we do it. In the current housing market, buyers often find a property they like, but they have not sold their existing home. Most buyers are aware that, the main stream lenders are strict, when it comes to short term bridging finance, and as a result, let good opportunities go by.  We have a solution to this.  We are happy to lend on open ended bridging finance proposals. This is where you are proposing to purchase a property and have not sold your existing one, but plan to do so.  We are happy to assist here.   

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.