BORROWERS Mortgage Commentary 03 / 2015
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Issue 2015 /3 20 March 2015

Welcome to the third fortnightly General Finance Mortgage Commentary for 2015. 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 am on 20 March 2015) the money markets were at the following levels:Official cash rate 3.50% (unchanged)
90 day bill rate 3.62 (down from 3.64)
1 year swap rate 3.56 (down from 3.57)
3 year swap rate 3.55 (down from 3.62)
10 year bond rate 3.22 (down from 3.36)
NZ/US dollar 0.7388 (down from 0.7477)

Baches will Become More Popular
Over the past two years we have seen good gains on most types of property in Auckland. In the past, when this occurred, many people have responded by buying a holiday home. Auckland is fortunate with good holiday locations being just a couple of hours drive away - to the north around Whangarei, to the east in the Coromandel and to the south west around Raglan. So far we have not seen this occurring. We believe this is likely to change. Agents have been telling us in places such as those above, that in the past few months, there has been more interest. We believe that this will continue.

Non-residents Must Build
There continues to be reports about non-residents purchasing property here, and squeezing out the locals. The solution is to allow non-residents to buy only brand-new properties. Let them take the development and construction risks. In this way we will get more properties built and the second hand market is left for the local people. This will actually lead to greater stability in prices, fewer people bidding for second hand properties and more supply will come on to the market as more new dwellings are built.

Capital Gains Tax
There was talk around the election about a capital gains tax. Labour, under its new leadership, has now virtually dropped the idea, saying that capital gains tax is like the superannuation issue - you have to be careful discussing it. There is little evidence showing a capital gains tax has any effect on a strong property market. Sydney has all the issues that Auckland has, yet there is a capital gains tax operating there. It has certainly not slowed the property market there or made it more affordable.

Business Finance
We are a lender that takes security over residential properties. We are totally flexible regarding loan purpose, such as purchasing a dwelling, refinancing, debt consolidation, and funding such things as boats and motor homes. We are also happy to lend for business purposes, whether to fund growth, purchase plant and equipment or to acquire stock for export. As long as we have a residential security we are interested in lending.

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.