Issue 2011 / 15 26 August 2011
Welcome to the first fortnightly General Finance Mortgage Commentary for 2011. We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general. Previous issues of this commentary can be found on our website http://www.general.co.nz/newsletters.htm
The Money Market
This morning (9 am on 26 August 2011) the money markets were at the
following levels:
Official cash rate 2.50% (unchanged)
90 day bill rate 2.91 (up from 2.86)
1 year swap rate 3.16 (up from 3.10)
3 year swap rate 3.65 (down from 3.68)
10 year bond rate 4.52 (up from 4.49)
Kiwi dollar 0.8290 (down from 0.8310)
House Prices are Rising in Auckland
Anyone driving around Auckland, particularly the inner city suburbs,
will see a number of "For Sale" signs with "Sold" on them. Houses have
been selling more quickly and it is only a matter of time, before prices
start rising. The reason for this is the lack of supply. This is caused
by a number of factors, but one important one is the diminishing number
of finance companies who were once of the most important providers of
residential construction finance. If people are unable to build more
houses, and Auckland continues to grow, then prices can only go up. What
we need are more providers of residential construction finance to enter
the market again.
Auckland City Council Rating Valuations
Currently the new Auckland City Council is carrying out their triennial
valuations for all the properties in the Auckland region. Householders
are likely to receive their new valuations during October this year. If
your property rises in value by more than the average across the city,
your rates increase will be greater than the average increase. The
converse is also true. The property market has been strong in certain
areas, such as the inner city suburbs, so rates will increase more than
average in areas like Grey Lynn, Ponsonby, and Royal Oak.
Keeping Your Insurer Informed
After the earthquakes in Christchurch, and various other natural
disasters, the value of having adequate insurance is well recognised.
Insurance companies have become tougher ensuring the conditions of their
policies are being adhered to. If they are not, householders may find
that, in the worse situation, they are not covered. To be on the safe
side, it is best to keep your insurer informed if your circumstances
have changed. For example, if you are planning to let your property for
a short period (such as during the rugby world cup) or doing a house
swap, your insurance company should be advised. Similarly if you are
transferring your house into a family trust, you must notify your
insurance company and get the new entity noted on your policy.
Gift Duty is Going
It is now official - Gift Duty is being abolished from 1 October from
this year. The reason for abolishing it is quite logical. Gift duty
only raised $1.5 million in revenue and yet cost the Government $500,000
to administer it. It may cost the private sector up to $70 million per
annum in compliance costs. For those with trusts or those planning to
form one, all the gifting can be done at once. Under the previous
system, with gifting at $27,000 per year for a single person (or $54,000
for a couple), gifting in some cases took many years (as well as
incurring annual solicitor charges). We doubt if this law change will
cause a flood of new trusts. Perversely, it will enable those who find a
trust an unsuitable structure for their purposes, to conveniently
rearrange their affairs and unwind their existing arrangements.
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.
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