General Finance Mortgage Commentary

Issue 2013 / 12   19 July 2013 

Welcome to the twelfth fortnightly General Finance Mortgage Commentary for 2013.  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 19 July 2013) 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    2.81 (down from 2.85)
3 year swap rate    3.52 (down from 3.55)
10 year bond rate   4.21 (down from 4.25)
NZ/US dollar      0.7858 (up from 0.7780) 

Our New Prospectus
General Finance is a deposit taking entity - which means it can receive investment funds from the general public. In order to do this we are required to prepare a prospectus each year. Our new prospectus has just been registered and it is now being printed. If you have monies to invest and are looking for higher returns than those being offered by the banks, we may be your solution.  If you are in this situation, please call us and ask for a copy of our prospectus andinvestment statement together with our latest rates.  Or visit http://www.general.co.nz/prospectus.htm and download a copy. 

Three Property Markets in this Country
There has been a lot of media commentary on the Auckland housing market recently. In reality, we have three housing markets in this country - Auckland, Christchurch and the rest. The Christchurch market is being driven as a result of the recent earthquakes.  There is a shortage of houses which are causing both rents and prices to rise. Auckland is being driven by a shortage of suitable properties to buy - but there may be a speculative element developing, with people thinking that houses prices will be higher in a year’s time.  Prices in the rest of the country are being driven by the normal economic factors. This is unlikely to change in the short term.

Rates Rises Premature
We are starting to see the banks putting up their longer dated fixed mortgage rates. Some bank economists are saying that interest rates may rise early next year. We believe that this is all premature. Rates should only start to rise when the economy is clearly in a recovery stage. This is not the case - growth is sluggish at best, unemployment is still high, and our overseas trading partners (particularly Australia) are not in robust economic health. This is further evidenced by our very low inflation rate. Now, or the immediate future, is not the time to be increasing interest rates.

Low Doc Lending
These loans were popular before the global financial crisis. We are still writing them, but on a short term basis, of up to two years only. It is a useful product for those wanting to tidy up their financial affairs before heading off to a mainstream lender.  We welcome your enquiries.

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.