Issue 2016 / 16 9 September 2016
Welcome to the sixteenth 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 9 September 2016) the money markets were at the following levels:
Official cash rate 2.00% (unchanged)
90 day bill rate 2.24 (up from 2.23)
1 year swap rate 2.07 (up from 2.01)
3 year swap rate 2.05 (up from 1.98)
10 year bond rate 2.29 (up from 2.27)
NZ/US dollar 0.7395 (up from 0.7301)
The Canadian Solution
Other cities around the world are seeing rapid house prices, as we are in Auckland. They include Sydney, Vancouver, Singapore and Hong Kong. In order to slow some of the prices down, the State Government of British Columbia, in Canada, has introduces a foreign buyers tax of 15%, for non residents who wish to buy in that state - although it is aimed at Vancouver. This has had the almost immediate impact of slowing down the Vancouver market. This is an idea that could be applied to this country. The additional revenue generated from these taxes could be applied to infrastructure improvements.
New LVR rules
The Reserve Bank has announced new tighter lending restrictions to be applied to residential property, throughout the country, commencing on 1 October this year. From this date residential property investors will generally need a 40% deposit to secure a mortgage loan and owner occupiers will need 20%. In both cases, the banks can make a small number of loans outside this criterion. The exemptions include an owner occupier funding a brand new home, or a rental property, where the funds are being borrowed to make the dwelling comply with the new building code. These new provisions make sense, but we believe that they should only apply to the largest five cities, as this is where the property speculation is more of an issue.
Home Show
Currently in Auckland, we have the annual home show, which is being held at the usual place, the Alexander Park show grounds in Greenlane/ Epsom. This is a very popular event for those interested in residential housing, particularly those who are looking out carrying out renovations. The show finishes this Sunday and it is expected to be extremely busy over this weekend.
Short Term Propositions
Our company is currently busy looking at a number of lending propositions. We can lend up to $800,000 on residential securities. What makes us different from many of our competitors is that we are prepared to lend across the country on suitable residential properties. We will, in certain circumstances, capitalise the interest.
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.