Issue 2016 / 13 29 July 2016
Welcome to the thirteenth 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 29 July 2016) the money markets were at the following levels:
Official cash rate 2.25% (unchanged)
90 day bill rate 2.29 (down from 2.38)
1 year swap rate 2.07 (down from 2.21)
3 year swap rate 2.06 (down from 2.20)
10 year bond rate 2.22 (down from 2.30)
NZ/US dollar 0.7085 (down from 0.7193)
Rates becoming a political issue
In October we have our local body elections, across the country. Virtually all city councils have increased rates substantially, over the past six years, which have been considerably above the rate of inflation. For many retired people, rates are their largest single expense. A number of families are having to budget extra carefully, just to pay their rates. We do not seem to be getting any more services for these extra rate costs - such as better bus services, regular berm mowing or better libraries. Despite these regular rate hikes, most rate payers have been silent on the issue. We have not seen any lower-rates-better-value pressure groups being formed. It will be interesting to see if anything develops on this important issue during the election campaign.
P Contamination
Purchasers should include, as part of their pre-purchase due diligence, a P contamination check. This should be included as a condition in the agreement for sale and purchase. It will uncover whether the property has been used for the smoking or the manufacture of P. If a property has been used for manufacture, significant clean up may be required to remove residue from surfaces. In the worst cases, whole internal structures will have to be replaced. Failure to do so may lead to the new occupants suffering negative health effects, and the property’s value being affected. A number of commercial providers offer P contamination checks.
Trusts are Still Useful
We are seeing fewer people forming trusts. If someone is purchasing a rental property, for example, and they wish to use another entity, a company is now most often used. Trusts are still useful in certain circumstances, such as for creditor protection, but they do require more management time. There has been a switch in preference to company structures.
Open End Bridging
We are in the market offering bridging finance. A number of our clients have short term projects, such as renovating a property or carrying out a small property subdivision. As these projects are for a shorter duration, often being completed within 12 months, we are happy to bridge them. We do not require a presales agreement or a firm takeout. In many cases we can look at capitalising our interest as well.
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.