BORROWERS Mortgage Commentary 19 / 2015
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Issue 2015 /19       2 November 2015

Welcome to the nineteenth 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 (9am on 2 November 2015) the money markets were at the following levels:
Official cash rate    2.75% (unchanged)
90 day bill rate       2.97 (up from 2.85)
1 year swap rate    2.78 (up from 2.73)
3 year swap rate    2.83 (up from 2.81)
10 year bond rate   2.99 (up from 2.98)
NZ/US dollar      0.6760 (down from 0.6867)

Solar Power
Currently great strides are being made with solar technology. Solar panels are decreasing in price and becoming more efficient. The problem with solar energy is that when the power is generated during the day, with the exception of heating water, it is not when it is needed.  During the next three years, we will see huge developments with improved battery technology, which will enable us to store this energy at an economical cost and then use it when it is needed. The residential solar power industry is about to go through the same process as mobile phones did in the mid 1980s - few people had them initially but ten years on they became ubiquitous.

Testing Your House for P
P or methamphetamine is a growing problem in this country. In most cases, the drug is home made, in residential dwellings. Once a property has been used for this activity, residues of the drug remain, which are dangerous to the occupants’ health. We suggest that if you are purchasing a house, particularly one that has been tenanted over a number of years, it is sensible to have the dwelling tested for this drug.  It will cost up to $500 to do so, but to rectify a P-tainted house will cost tens of thousands of dollars.

Holiday Home Buying
In the past, when Auckland house prices have had a strong run, owners have used their increase in equity to purchase holiday homes in places such as north of Whangarei and in the Coromandel. This time round, this does not seem to happening to the same extent. More home owners are appearing to be using their equity to purchase rental properties. Certainly people are not using their increase in equity to invest in the share market. This does tend to happen in some other jurisdictions, such as Australia and the UK. It appears that most people are just sitting tight on their capital gains. 

Poor Credit
A number of borrowers are being turned down due to credit issues. These credit issues may have been collected one or two years previously, but the banks are taking a hard line with them. Rather than the borrower not being able to purchase their new dwelling, and have wasted all their time searching for it, a solution is to bridge it with us, for say, 12 months. Then any credit issues are a year older, and if our payments have been met in a timely manner, the loan should be able to be refinanced to a main stream lender.

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.