Issue 2016 /5         8 April 2016

Welcome to the fifth 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 8 April 2016) the money markets were at the following levels:
Official cash rate    2.25% (unchanged)
90 day bill rate       2.33 (unchanged)
1 year swap rate    2.16 (down from 2.23)
3 year swap rate    2.24 (down from 2.32)
10 year bond rate   2.83 (down from 3.08)
NZ/US dollar      0.6777 (up from 0.6697)

New OSH Requirements
On 4 April 2016 the tough new Health and Safety at Work Act came into force.  Its aim is to improve health and safety in the work place. It imposes heavy penalties on organisations that are convicted of a breach, as well as their directors and chief executive.  This can include jail time.  Obviously this impacts on the higher risk industries, such as forestry and transportation. But other activities may also be at risk - such as a school principal regarding school camps or clubs offering more extreme sports. Even commercial and residential landlords are caught up in this legislation. Our view is that we do not think it has been fully thought through. This is a poor reflection on our legislators.

Trusts May Come Back into Fashion Again 
Just when the interest in family trusts appears to be waning, the new Health and Safety at Work Act may see trusts becoming more popular again. More company directors, chief executive officers and even school principals may look at ways to protect their assets, just in case they are caught up in an unfortunate prosecution. With this new Act, if you hold certain positions, you do face an increase in risk. One of the simplest ways to try and protect your assets, is through a family trust structure. This is certainly now worth considering. 

Kiwibank Partial Sale
The Government owner New Zealand Post is selling 45% of its share in Kiwibank to the Accident Compensation Corporation and the NZ Superannuation Fund. This is positive, as both organisations do have access to capital. We think, however, that an opportunity has been missed. If a partial privatisation of Kiwibank had been included with the electricity company sell downs, this would have given the ordinary Kiwi, either directly or through their KiwiSaver account, the ability to own a portion of a New Zealand bank. Australians are able to own their indigenous banks - it would be good if we could have been able to do the same.

Poor Credit Not a Problem
One of the ways that we are flexible with our lending, is that we are happy to look at borrowers who have had a credit issue in the recent past. This may include a business failure or a period of unemployment, where their situation has since improved, but it is not yet reflected in their credit report.  After 12 months or so with us, provided repayments have been made in a timely manner, the borrower should be able to go to a mainstream 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.