Issue 2017 / 17 22 September 2017
Welcome to the seventeenth 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 22 September 2017) the money markets were at the following levels:
Official cash rate 1.75% (unchanged)
90 day bill rate 1.95 (unchanged)
1 year swap rate 2.04 (up from 1.99)
3 year swap rate 2.44 (up from 2.27)
10 year bond rate 3.04 (up from 2.76)
NZ/US dollar 0.7308 (up from 0.7233)
Are We Entering a Recession?
We may be entering a recession in Auckland. The housing market has slowed. We are seeing houses being passed in at auction or lower prices being achieved, and there is talk that some real estate firms may close. There seems to be less money around - ask any deposit taker. Interest rates have bottomed, with any increase being like a tax rise - where there is less money in circulation. On top of this there is political uncertainty. This affects whether certain business decisions are being given a red or a green light. If this is the case, it is being caused by the Reserve Bank over-regulating the residential lending market, slowing it down and in the process, slowing down the economy.
Building a House in a Day
Fletchers, our largest construction company, is looking at new building techniques in order to speed up the construction of new dwellings. They are using a lot of pre-fabricated materials and panels, built in a factory. It is a bit like using a motor car assembly process to build a house. The house is assembled on site, from these factory produced components. Innovation like this, needs to be praised, as it will lead to more houses being built quickly, at hopefully lower prices.
Singapore Solution
We hear a lot about our housing crisis and high prices. No one is talking about the overseas success stories in dealing with these issues. One success story is Singapore, where around 80% of all housing is subsidised and on sold by the Government. In Singapore an apartment is sold to the potential occupant, using their compulsory savings as a deposit, with a low interest loan provided for the balance. Secondly, to keep the price down, and to prevent creating future slums, apartments are sold on fifty year terminating leasehold land. After fifty years they revert back to owner of the freehold (often the Government) who knocks them down, builds new ones and the cycle repeats itself. If you go to Singapore, you can see this policy working.
Second Mortgages
We have limited funds available. We are happy to look at second mortgages and the ones we like to do are normally straight forward. They include funds for paying tax, home improvements, or more business orientated purposes such as paying for an import order. The advantage of these types of loans, is that they can be either repaid or refinanced with a mainstream lender. We would be happy to receive 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.