Issue 2017 / 4 24 March 2017
Welcome to the fourth 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 24 March 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.98 (up from 1.97)
1 year swap rate 2.06 (down from 2.08)
3 year swap rate 2.54 (down from 2.64)
10 year bond rate 3.22 (down from 3.39)
NZ/US dollar 0.7027 (up from 0.6900)
OCR
The Official Cash Rate was reviewed yesterday. Predictably, there was no change. The interesting aspect was the Reserve Bank Governor’s comments. He is expecting interest rates to rise in the USA this year, which will lead to a firming of their currency and a weakening of ours. Inflation, which has been benign in this country over the past five years, is expected to increase slightly. As a result, our interest rates, which are at cyclical lows, will start in increase in about twelve months time. The Governor is concerned with certain geopolitical risks, such as any restrictions on free trade or likely trade wars. New Zealand is still in a good place.
Anti Money Laundering Changes
Anyone dealing with financial organisations will know how much identification has to be provided. You have to prove your identity, (most often with photographic identification such as passport or drivers’ licence), and your residential address (with a utility bill). Depending on the nature of the transaction, you may also have to confirm where your funds came from. New legislation is being passed this year to put other organisations that receive and transfer funds (such as lawyers, real estate agents, accountants and car dealers) on the same footing as banking and finance entities. This is all due to the tightening up of illegal money being laundered. This is a major inconvenience to the vast majority of honest people, but it is the sign of the times. Suitable identification and proof of source of funds will be required more often in the future.
Changes Affecting Property Investors
The Labour Party has signalled that, if they have the balance of power, they will abolish negative gearing (i.e. allowing interest deductibility on rental properties). We believe that this is only the beginning. Whoever is in power will make changes negatively impacting on those investing in residential property. Other forms of investment, such as buying of businesses, will be treated more favourably. What politicians are forgetting, is that owning and managing rental properties is in fact a business.
Short Term Loans are Great
As a result of our fund raising over the past two months, we have funds to lend. We are looking at all types of short term loans, from $50,000 to $700,000. Second mortgages are included. In some circumstances, we are happy to capitalise the interest. We look forward to receiving your enquiries.
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.