Issue 2017 / 14 11 August2017
Welcome to the fourteenth 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 (9 am on 14 August 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.95 (up from 1.94%)
1 year swap rate 2.01 (down from 2.03)
3 year swap rate 2.34 (down from 2.41)
10 year bond rate 2.82 (down from 2.95)
NZ/US dollar 0.7270 (down from 0.7489)
Your Credit Rating is Valuable
Credit scoring, which is common in many overseas jurisdictions, is becoming more widespread in this country. An individual’s rating is becoming increasingly important and impacts on whether they can obtain a credit card, hire purchase or even a mortgage. People now have to manage their credit rating, although in most cases they will never see it. It is most important to meet all your financial obligations in a timely manner, as per their terms and conditions. Having a strong credit rating or score is like a country having one - it makes it easier and cheaper to borrow.
Auckland Inner City Apartments
This is proving to be a good year for new apartments being completed in inner city Auckland. It is expected that 873 will be finished this year- so far 343 of these have already been completed. This is up on the 794 in the previous year, well up on the 218 in 2015 and in 2014 none were completed. These figures relate to just the inner city and do not include the North Shore, Manakau and the city fringes. These figures are still well down on completions prior to the global financial crisis. The best year was 2005 with 2,870 apartments being completed. Although this year looks good, we still need more dwellings to be built.
Leaky Buildings
On Tuesday 18 July 2017 there was a good article in the NZ Herald by Paul Lochore who is managing director of Lochore’s Real estate on the North Shore in Auckland. He was discussing the silent epidemic of leaky buildings. This problem has not just affected property owners financially but also emotionally and physically, through relationship breakdowns and in some cases sicknesses such as depression. The article pointed out how difficult it was to raise finance to rectify the problem. The worrying thing is that the issue does not seem to be abating. Further action and financial assistance packages are now urgently required.
Term Deposits
We are currently offering our investors 5.50% for two year term deposits and 5.75% on three year deposits. These are attractive rates. Investments in General Finance term deposits are secured by a first ranking security interest in favour of an independent trustee. This secures our payment obligations under the term deposits. The security interest is over all of our present and future real and personal property including the loan advances we make.
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.