Issue 2016 / 21 25 November 2016
Welcome to the twenty-first 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 25 November 2016) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 2.03 (down from 2.09)
1 year swap rate 2.10 (down from 2.13)
3 year swap rate 2.46 (up from 2.42)
10 year bond rate 3.20 (up from 3.00)
NZ/US dollar 0.6998 (down from 0.7207)
Testing Your Home for P
One problem that did not exist twenty years ago, but is a real issue now, is the making and smoking of P. Most people are aware that once a property has been used as a P Lab, it will become contaminated and it can cost tens of thousands of dollars to rectify. We understand that Housing NZ, has spent hundreds of thousands of dollars on decontaminating their rental properties and in some cases, have actually demolished houses. It has now reached a point where, if you are purchasing a property to either live in or let out, a P test should be done. It is an added cost, but we believe it is a good insurance policy. The same strategy should also be adopted if you are purchasing a commercial property.
NZ More Popular for Study
Around the world, the demand for quality education is increasing. New Zealand is doing well in this area and, in fact, Auckland University ranks in the top hundred universities worldwide. A number of our trade and diploma courses are also of a high quality. Our tertiary institutions are relatively free from corruption and cheating, although when these abuses do occur, they make the headlines. Students are the reason that downtown Auckland, during term time, looks more like an international city, rather than a New Zealand one. As competition for qualifications continue to intensify, you will see more foreign students in this country.
Renovating Makes Sense
If you have tried to find a builder, a plumber, or a roofer recently, you will be aware how difficult it is. This is partly the result of the renovation boom that is taking place at the moment. Renovation makes sense. If you look at what you have to pay in agent’s commission, other expenses and a likely larger mortgage when trading up, then upgrading your existing property makes a lot of sense. We expect this trend to continue. Renovations are good for the economy as it creates jobs, and also sales in the building supplies sector. The impact of this is being reflected in our National economic statistics.
Strong Population Growth
Our population is growing strongly and is now just under 4.6 million people. There are three main reasons for this: New Zealanders returning home from overseas, external migrants coming here and by natural increase. The interesting aspect is that our population is still relatively young but is aging when compared to Western European and Japanese societies. 86.7% of our population is aged 65 years or younger. The issue with our population growth is that it is not being evenly distributed, with most of the growth going to Auckland. This will not change - Auckland has just got to increase its infrastructure spending and build more houses.
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.
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