Issue 2012 / 15   31 August 2012

Welcome to the fifteenth fortnightly General Finance Mortgage Commentary
for 2012.  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 31 August 2012) the money markets were at the
following levels:
Official cash rate      2.50% (unchanged)
90 day bill rate        2.65 (unchanged)
1 year swap rate        2.65 (unchanged)
3 year swap rate        2.87 (down from 2.97)
10 year bond rate       3.44 (down from 3.84)
Kiwi dollar     0.8020 (down from 0.8109)

Auckland House Prices
Auckland house prices are appreciating and are now not far from their
2007 peaks.  In central Auckland house prices have gone up by 7.1%, the
North Shore by 6.2%, the Waitakeres by 5.9% and Manakau by 6.0% (all
over the past 12 months).  The negative here is that it makes it harder
for first home buyers to purchase their own house.  It is good news for
existing owners.  As most of our wealth is tied up in our houses,
stability and some appreciation is positive. It will encourage
homeowners to spend a bit more and it may make them more confident to
borrow to start a new business or expand an existing one.  This is good
for the economy. Land agents say they are seeing a recovery rather than
a boom.

Trusts and Insurance
We discuss this topic each year, as we feel it is important for those
putting their property into a family trust. The individual or couple who
used to own their house, no longer do - it is held instead in trust by a
number of trustees. As a result, it is important that the house is
insured in the name of the trust. This is easy to do by contacting your
insurance adviser. The whole issue with insurance is becoming stricter,
so it is of vital importance that your house is insured in its correct
entity.

Spring Rush
Tomorrow is the first day of spring. Traditionally this is an active
time for real estate. We believe this year will be no different.  We are
still in recession but many people have figured out how secure their job
is. Mortgage rates are low and will continue to be so (in the medium
term). There are few brand new houses being built. Auckland's population
is continuing to grow, particularly with people moving here from the
provinces (such as Christchurch), new immigrants and kiwis returning
from overseas. We believe, in Auckland in particular, there will be a
spring surge - but nothing like in the boom years from 2004-6.

Repaying Your Mortgage Faster
Those who bought their home five, six, or seven years ago, did so when
mortgage rates were higher.  Many borrowers have gone from higher fixed
rates to lower floating rates (with lower repayments).  For example - if
you borrowed five years ago on a 25 year table mortgage at 8.00% your
monthly payments were $2,701.36. If your mortgage rate is now 5.74%, you
have two choices - to maintain your existing payments or reduce them to
$2,199.76. If you can afford it, we suggest that you keep your payment
schedule at the previous level. If you do, you will pay your remaining
mortgage balance off in just under 14 years. This means your total
mortgage term will be reduced from 25 to just under 19 years. This means
a real savings for you.

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.