BORROWERS Mortgage Commentary 18 / 2014
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General Finance Mortgage Commentary

 Issue 2014 /18       10 October 2014

 Welcome to the eighteenth 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 (9.00 am on 10 October 2014) the money markets were at the following levels:
Official cash rate    3.50% (unchanged)
90 day bill rate       3.68 (down from 3.73)
1 year swap rate    3.80 (down from 3.84)
3 year swap rate    4.14 (down from 4.19)
10 year bond rate   4.07 (down from 4.18)
NZ/US dollar      0.7865 (down from 0.7926)

More Renovations Will Happen
We often hear of the plight of the first home buyers, trying to purchase their first home. While this is an issue, there is another issue out there - it is those wanting to trade up from the first home (may be a unit, an apartment or a smaller home, someway from the CDB) to their second home. Funding the difference, of up to $500,000, may be impossible.  What we will start to see, is more people renovating and adding rooms to their smaller houses, rather than trading up.  Those with apartments or units may opt to purchase a bigger one, if they wish to start a family.  In many cases ,it is just not financially sensible to incur considerably more debt to be a little closer to the CBD.

Auckland House Prices
Auckland house sales rose in September, reversing the previous three months of declines. In September, 959 dwellings were sold, up from 909 in the previous month.  At the same time last year, sales were 1,105. The average price increased by 3.8% for September, which is a record, but this was influenced by a greater number of million plus dwellings being sold. This was up by over 12% on the previous year.

Apartment Buys
For those wanting a cheaper entry into the housing market, particularly in Auckland and Wellington, apartments are a good option. There are some negative issues with them, such as the leaky building issues, earthquake strengthening, and body corporate fees. What surprises us, is that there has not been a ranking or rating schedule done on apartments, with one being excellent and five being poor. A valuation firm could do this and sell as part of their services. This would assist, we believe, those wanting to purchase and invest in this market.

Asset Lends
We are happy to look at straight forward asset lends on residential properties. Often people may be taking time off work, to tidy up a property in order to sell it.  As a result they do not meet normal banking lending criteria, and this is where we come in. If a property needs considerable work, and if this is done, a good financial reward can be realised.  Taking six or so months off paid employment, to do this work, may be a sound idea.

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.