Issue 2017 / 11 30 June 2017
Welcome to the eleventh fortnightly General Finance Mortgage Commentary for 2017. We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general.
The Money Market
This morning (9 am on 30 June 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.97 (up from 1.94%)
1 year swap rate 2.07 (up from 2.00)
3 year swap rate 2.52 (up from 2.36)
10 year bond rate 2.96 (up from 2.73)
NZ/US dollar 0.7290 (up from 0.7206)
Auckland Market is Cooling
There is no doubt that the Auckland market is cooling. For the past few years, home owners have been used to double digit price increases. This has slowed - price increases in Auckland over the past year were 9.3% but, more importantly, over the last quarter, prices rose by just 0.1%. Agents are reporting that they have more listings on hand (which is positive for those looking to buy) and that properties are taking longer to sell. On top of all this, it is winter which is traditionally a slower period. The election, which is not that far away in September, will add further uncertainty. Interest rates have bottomed and may start to increase next year. Our view is that the market has had a strong run and there is likely to be a slower period over the next twelve months.
Adding a Bedroom Makes Sense
Due to the high prices for residential houses it is expensive to move. You have agents fees and if you are looking for a more suitable house, it may well cost you 30-50% more, and yet it may be little different from your existing property. If it is more space that you require, a solution may be to extend your living room, kitchen or add another bedroom. Improvements such as these, not only will fulfill your personal requirements, but will in most cases increase the value of your property. Before embarking on this we suggest you obtain the necessary advice. Contacting a registered valuer is a good starting point.
Mortgage Money Becoming Harder to Obtain
Those thinking of buying their first or subsequent property or refinancing should be aware that the mortgage market is quite different now to how it was a year ago. There are restrictions on how much home buyers can borrow and investors must have considerably more equity. The question is why is this occurring? It is partly due to new Reserve Bank regulations. Banks appear to be funding more onshore now through retail deposits, which is harder to do as consumers prefer to be spending rather than saving. Mortgage markets do move in cycles. Currently we are at the stage where money is scarcer and mortgage rates have definitely bottomed out.
Funds are Required
General Finance is a deposit taker and we are looking for funds. Our minimum deposit is $5,000 and for those who invest $10,000 or more, we are able to pay our interest monthly. This is great for investors with various outgoings to be paid on a monthly basis. It is just like receiving your wages or salary. On top of that for our three year term, we are offering an attractive rate of 5.75%.
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.