Issue 2017 / 15 25 August 2017
Welcome to the fifteenth 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 25 August 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.95 (unchanged)
1 year swap rate 2.01 (unchanged)
3 year swap rate 2.35 (up from 2.34)
10 year bond rate 2.90 (up from 2.82)
NZ/US dollar 0.7200 (down from 0.7270)
Fewer Trusts
The Trusts Bill was introduced to Parliament this month. This Bill, when it becomes law, will rewrite the old Trustees Act of 1956. Some of the changes being recommended are:
- having a mandatory list of Trustees duties. This is a bit like the Companies Act is with companies.
- specifying requirements for managing trust information and discussing information with beneficiaries.
- restricting trustee’s indemnity and exemption clauses.
- removal and appointment of trustees without going to court.
The public is able to make submissions on these proposed changes. The likely impact going forward will be fewer trusts. As trustees duties are clearly spelled out, we believe that a number, particularly single asset trusts (owning say a family home) will find it simpler to dissolve the trust and revert back to the owners’ personal names.
Anti-Money Laundering Phase 2
The Anti Money Laundering and Countering of Terrorism Amendment Act 2017 was recently passed by Parliament and will come into effect starting this month. Already banks, finance companies and other deposit takers are complying with this Act. What the amendment Act does is to extend the scope to include others, such as high value dealers (of such things as jewellery, bullion, boats and cars), the NZ Racing Board, lawyers, accountants and finally real estate agents. These are dramatic changes and when individuals are dealing with the above groups they will now have to produce suitable identification and maybe asked other financial questions similar to what the banks and finance companies currently require.
WOF’s on Properties
Currently the Wellington City Council has introduced voluntary warrant of fitness for rental properties. Landlords can voluntarily apply to the council for a WOF. If they fail there is no requirement currently to fix up the property. The council is thinking of making this compulsory in three years time. The real issue here is that in an already tight rental market it will make rentals more expensive. A better solution would be to encourage and offer landlords real incentives, be they cash or small loans at favourable rates to insulate their properties.
Term Deposits
We are currently offering our investors 5.50% for two year term deposits and 5.75% on three year deposits. These are attractive rates. Investments in General Finance term deposits are secured by a first ranking security interest in favour of an independent trustee. This secures our payment obligations under the term deposits. The security interest is over all of our present and future real and personal property including the loan advances we make.
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.