BORROWERS Mortgage Commentary 12 / 2014
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Issue 2014 / 12   18 July 2014

Welcome to the twelfth 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 (4.00 pm on 17 July 2014) the money markets were at the following levels:
Official cash rate    3.25% (unchanged)
90 day bill rate       3.65 (unchanged)
1 year swap rate    3.89 (down from 3.93)
3 year swap rate    4.32 (down from 4.41)
10 year bond rate   4.38 (down from 4.44)
NZ/US dollar      0.8694 (down from 0.8766)

Age of House Buyers
Back in the early 1970s, the average age that an individual purchased a property was 25. Today it is around 36. The whole flatting and rental situation has changed. Whereas in the 1970s flatting was a relatively short interlude before home ownership, today it is more permanent, with people renting for ten, fifteen or more years. This is one of the reasons why people have been investing in the residential rental property market - there is an increasing demand for it.  Quite a shift has occurred in accommodation choices, over the past forty years. This trend will continue, and residential property investment will remain an active investment class.  

Shell Companies
New Zealand has been criticised for allowing the easy formation of companies. The system has been open to abuse, and has been used for money laundering and other criminal activities.  Shell companies, were in many cases owned through complex structures of other companies, that ultimately appeared to be controlled offshore.  A shell company is defined as one having no assets or defined purpose, it is just sitting there. The Government has enacted legislation providing that all New Zealand registered companies must have a director who is a permanent New Zealand resident or is a director of a company in a prescribed enforcement country (such as the UK or Australia).

IRD Getting Harder on Mailed Cheques
We all know that posting a letter is getting more expensive, it takes longer to get to its destination and there are fewer post boxes on our streets. Now it is official - the Inland Revenue Department has issued a warning - if you post your payment to the IRD before the due date, but they do not receive it on time, you may incur penalty charges. Having it postmarked before the due date is no longer sufficient. The payment has to arrive by the due date. They are advising you to make payments online.

We are Looking for Investors
General Finance is a deposit taker.  That means we source our funds from the general public. We then use these funds to lend out on mortgages. If you or your family have funds to invest, then talk with us.  We offer an attractive rate of 6.50% p.a. for either two or three years. As part of our offering, we can pay the interest monthly on deposit amounts over $10,000. This is a great way to invest, as you will receive a regular monthly income. This is helpful for many retired people who still have a number of monthly expenses to pay. For more information, please contact us so we can send you a copy of our prospectus and investment statement.

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.