BORROWERS Mortgage Commentary 11 / 2016
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Issue 2016 / 11      1 July 2016

Welcome to the eleventh fortnightly General Finance Mortgage Commentary for 2016.  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 1 July 2016) the money markets were at the following levels:
Official cash rate    2.25% (unchanged)
90 day bill rate       2.42 (up from 2.33)
1 year swap rate    2.24 (down from 2.25)
3 year swap rate    2.23 (down from 2.29)
10 year bond rate   2.35 (down from 2.43)
NZ/US dollar      0.7129 (up from 0.7053) 

Household Ownership
We know that the level of home ownership in this country is declining, but by how much? It is hard to obtain exact figures, but Statistics New Zealand does show an increase in the number of renters over the past ten years. At 31 March 2006, there were 1,546,300 households, in this country, of which 1,023,900 (67%) were owner occupiers and 522,400 (33%) were renters. To 31 March 2016, the number of households has increased to 1,696,500, with 1,077,000 (63.48%), owner occupiers and 619,500 (36.52%) tenanted. The trend with more renting is set to continue.

When you are buying a new property, or refinancing an existing mortgage, the lender will require your house to be insured.  Insurance is there to protect the lender, but it also protects the borrower should the property be damaged. In the past ten years, we have seen a number of major disasters in this country - the Christchurch earthquake being the largest. Many people realised the value of having their house insured.  Insurance companies are asking a lot more questions.  When applying for insurance, we suggest that you do this sooner than later. They days of arranging insurance on the day of settlement have gone.

P Labs
This is becoming an increasing problem in this country and it is a nightmare for any landlord to be faced with. It is expensive to decontaminate a dwelling, if P has been either used or manufactured. One way to view how serious a problem this is, is to look at what is happening with our state houses. According to figures released earlier this year, under the Official Information Act, Housing NZ expects to decontaminate as many as 600 houses this year. This is nearly 2 a day.  Two years ago, the figure was only 28 for the whole year, but the first quarter of this year, it was 174. Over the past year, 13 houses have had to be demolished, as the contamination was so bad. Unfortunately the problem is expected to get worse. Landlords need to be aware how serious this issue is, and have management measures in place.

Debt Consolidation
We provide first and second mortgages on an interest-only basis. We are happy to consolidate multiple debts. It is not uncommon at certain points in peoples’ lives, due to unforeseen circumstances, to accumulate numerous short term debts such as credit card, store loans, and personal loans.  These all require the payment of interest as well principal, and can become overwhelming. The solution is to consolidate all these short term consumer loans into your main mortgage or second mortgage and only have one or two monthly payments, usually at a lower interest rate. 

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.