General Finance Mortgage Commentary

Issue 2013 / 19   25 October 2013

Welcome to the nineteenth 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 25 October 2013) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.67 (up from 2.65)
1 year swap rate    2.98 (up from 2.96)
3 year swap rate    3.88 (down from 3.94)
10 year bond rate   4.56 (down from 4.70)
NZ/US dollar      0.8418 (up from 0.8259)

Special Housing Areas
To assist with land supply shortages in Auckland, ten zones have been designated as special housing areas. The biggest tranche is in the Kumeu area, in Auckland’s west, where 65 hectares have been earmarked for around 2,000 homes. The advantage with these special housing areas, is that the consent approval process has been sped up. Consents for greenfields sites must be approved within six months and for brownfields (existing housing areas) within three months.  This is a substantial improvement, as under the old system, consent approvals could take up to several years.

Changes with Trusts
There is a review of the trust legislation underway. This may have significant implications for your average family trust. Several issues are being considered, such as clarifying the duties of trustees, looking at the issue of relationship property within a trust, a more refined approach to the power of the courts to review the actions of trustees, and making our trust laws consistent with other common law countries such as Canada, Australia and the UK. There is talk of making some of these changes retrospective.  This potential retrospective aspect is of serious concern, as this seldom happens with other pieces of legislation.

Rates
The local council elections around the country are over, and new councils can now get down to business. Over the past three years, in Auckland, many people have seen their rates rise by up to 33%. In the Kiapara district, north of Auckland, there is currently a rates revolt in progress, due to the excessive rate increases. Even in Northland, many people are complaining about their excessive rates.  Councils have to realise that they just cannot keep putting up their rates and they have to look at improved efficiencies and other ways to fund their projects. Otherwise we will become tenants in our own homes. 

Tougher Mortgage Rules
The tougher mortgage rules are beginning to have an effect on the property market. Both brokers and first home buyers are saying it is now harder to obtain higher loan to value mortgages. We are being told it is also becoming harder to obtain finance for loans slightly outside of bank criteria. This is where we come in at General Finance.  We are more than happy to look at bridging, asset lends, and low doc loan proposals.  

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.