Issue 2017 / 3 10 March 2017
Welcome to the third fortnightly General Finance Mortgage Commentary for 2017. We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general.
The Money Market
This morning (10am on 10 March 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.97 (down from 1.98)
1 year swap rate 2.08 (down from 2.09)
3 year swap rate 2.64 (up from 2.57)
10 year bond rate 3.39 (up from 3.23)
NZ/US dollar 0.6900 (down from 0.7230)
We Have Money to Lend
Over the past few months we have been receiving more applications than we can fund. During those months we have been actively funding. This has been successful and we can now say it is business as usual - we have funds to lend. To recap, we are interested in all types of short term lending where residential property or land is being offered as security. We offer second mortgages as well as firsts.
Insulation for Rental Properties
By 1 July 2019, rental properties will have to be insulated. Tenancy agreements are currently being changed to show whether a property has been insulated or not. The insulation requirement applies to both the ceiling and the under floor areas. It may cause rents to rise, but certainly an insulated property should be easier to let. From the tenants’ perspective, electricity bills should be lower. Insulating a property is not cheap and ranges from around $2,000 to $3,500. Landlords would be well advised to commence this process now, before the rush starts.
Non-residents Must Build
It is more difficult to borrow funds for construction than for the purchase of an existing dwelling. Lenders have become more conservative. However, we need to build more dwellings, particularly in Auckland. One obvious solution is to get non-residents, wishing to buy property in this country, is to allow them to only buy brand new dwellings, as is the case in Australia, Canada and Singapore. If non-residents wish to buy here, they should be the ones providing the scare construction finance and as a result they would not be competing with the local population in the second hand housing market.
Little Mention of a Capital Gains Tax
We are now in the election stage of the year. Interestingly, this time three years ago, a capital gains tax was being talked about - particularly by the Labour and Green parties. So far, this issue appears to have died. Another issue that was topical at the same time was electricity prices and the creation of a central power purchasing authority. This unworkable plan seems to have totally died. It looks like one of the main elections issues will be housing and its associated issues.
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.