Issue 2016 / 12 15 July 2016
Welcome to the twelfth fortnightly General Finance Mortgage Commentary for 2016. 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 15 July 2016) the money markets were at the following levels:
Official cash rate 2.25% (unchanged)
90 day bill rate 2.38 (down from 2.42)
1 year swap rate 2.21 (down from 2.24)
3 year swap rate 2.20 (down from 2.23)
10 year bond rate 2.30 (down from 2.35)
NZ/US dollar 0.7193 (up from 0.7129)
Ghost Houses
According to the last census, around 33,000 dwellings may be empty around Auckland - yet the city has an accommodation shortage. However, we do not believe this is as serious as it may first appear. There is a group of people who have a house in the country and a place in the city. They may use their city place only one or two nights a week. There are others who take extended holidays and their homes are empty for two or three months of the year. Then there is another group with their properties being renovated over an extended period. Some of the properties included will be holiday homes. Some may be empty waiting for the new owners to move in. Keeping a property empty for a long term (such as two or three years) is fraught with problems. There are issue with insurance, security and vandalism, and unattended dwellings start to develop maintenance issues. We do not believe there are large numbers of people deliberately keeping dwellings empty for extended periods.
Rental Properties Now a Place of Work
Under the new Health and Safety laws, which came into force this year, a landlord is classified as a person conducting a business. Their rental property is classified as a work place, for those contractors such as plumbers, gardeners and electricians carrying out work on that property. The landlord has to ensure that the contractor is competent, and has a health and safety plan in place. We believe that this is over the top. The winners in all this will be the property managers. The easiest way for a landlord to protect themselves from this law is to use a professional property manager.
Agents Are Disclosing More
Over the past couple of years real estate agents have been required to disclose more information to potential buyers. Agents must disclose such things as whether the property has any water tightness issues, alterations that have been done without council consent and whether there are any boundary issues. Buyers need to be more proactive in asking questions, which real estate agents have to honestly answer. Some should include
- Has the property been used as a P Lab?
- Does it have an unusual past, such as being the scene of a murder or having been a gang headquarters?
- Are there any changes to the area’s zoning? For instance, will it become a medium density housing area?
- Are there any community issues, such as cell phone towers being planned?
Agents have a duty to disclose, but buyers need to be informed as to what are the right questions to ask?
Asset Lends
We are happy to consider asset lends. Many borrowers looking at these loans have a specific project in mind. This may include subdividing a section or building a second house on the back of that section. The takeout is to sell either the house or the section. In certain circumstances we are happy to capitalise interest. This is one area where non-bank lenders can provide a niche product (capitalising of interest) which mainstream lenders are reluctant to do.
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.