BORROWERS Mortgage Commentary 14 / 2015
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Issue 2015 /14       21 August 2015

Welcome to the thirteenth 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 evening (9am on 21 August 2015) the money markets were at the following levels:
Official cash rate    3.00% (unchanged)
90 day bill rate       2.90 (down from 3.02)
1 year swap rate    2.81 (down from 2.85)
3 year swap rate    2.95 (down from 2.96)
10 year bond rate   3.56 (up from 3.01)
NZ/US dollar      0.6630 (up from 0.6540)

Tougher Rules for Offshore Buyers
Our economy is slowing, but house prices remain firm in several parts of the country. This may be partly due to some offshore buyers getting in quickly, before the rule changes that come in to force on 1 October this year. Buyers will need to have a New Zealand bank account and an IRD number. It is quite difficult to open a bank account in this country, as you need three different pieces of identification. It will be interesting to see what effect these new rules have on the property markets.

Charitable Trusts Could Assist
Over the past twenty years there has been a considerable increase in the number of charitable trusts being formed, and a large number are continuing to ask the public for donations. A new area, where some of them may want to become active, is in assisting first home buyers with their initial house purchase.  This could be by the way of a second mortgage, at say a low concessional rate for a period of up to 7 years. After that, the mortgage will be refinanced to a mainstream lender, assuming the equity has increased in the property. The charity would be making a real difference in assisting ordinary New Zealanders into their first home. Once the loan is repaid, the funds could then be readvanced to another deserving family. 

Auckland City Rates
Those that reside in the greater Auckland area will have, by now, received their rate notices.  Most are facing increases of around 10%, yet inflation hovers around 1%.  One of the issues with rates in general, is the number of organisations that receive rate remissions or do not pay them at all. The more organisations there are that receive these remissions, the more that ordinary householders have to pay.   Those that do not pay rates include Government departments, universities, schools, and social welfare agencies.  They are all consuming council services but they are not contributing towards their provision. All state agencies should be on the same footing as ordinary householders and businesses and pay their fair share in rates.

Mortgagee Sales
Our economy is slowing, and unemployment has increased from 5.2% to close to 6.0%, (it is higher in some regional areas). Inevitably, mortgagee sales tend to increase. This is a sad situation for those involved but we can assist in some of these situations. If the borrower has 30% equity in their home, but all reasonable communication has broken down with their lender and a mortgagee sale is likely, we can probably assist. We are fine to lend when a property law act notice has been issued and the mortgage is in arrears. We can step in, restructure the mortgage, and provided our repayments are made on time, in most cases the borrower will be able to go back to another mainstream lender, at a lower interest rate, in 12 months time. 

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.