Issue 2017 / 18 6 October 2017
Welcome to the eighteenth 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 6 October 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 2.02 (down from 2.04)
3 year swap rate 2.39 (down from 2.44)
10 year bond rate 2.95 (down from 3.04)
NZ/US dollar 0.7128 (down from 0.7308)
More Due Diligence Required
Years ago it was much easier to buy a house. Now you have to do such things as checking weather tightness, obtain building reports and checking for P contamination. But you have to go further. Council LIM reports are a must and further research needs to be done as to whether the property concerned is on a flood plain (as Edgecombe is), and are there cliffs or banks on the property which may be geologically unstable (as was recently shown to be the case in Wellington). Sea level changes may occur. You need to investigate this if you are purchasing a property on a beach front or in low lying areas near the sea. Now when purchasing a property there is a lot more issues to consider.
What is Kiwibank Doing?
Kiwibank, the New Zealand bank set up by the Government, and still mostly owned by it, was set up to provide the average Kiwi with a more competitive home loan option to assist borrowers into their own homes. Over the past three months they have only added a net $20 million to their mortgage book. What are they doing? Obviously not much. If they are not going to fulfill their function they should be closed downed or sold to someone who can.
Regions Performing Well
In the past six months the Auckland market has been easing. Agents are reporting fewer buyers and more listings. Auction clearance rates are lower. A number of regional North Island centres are still experiencing strong growth - such as Rotorua, Napier and Palmerston North. For example house prices in the Manawatu/Wanganui area have increased by 19% over the past twelve months. One of the reasons for this, is that some Aucklanders have moved to regional centres to take advantage of cheaper housing, and immigrants are also moving for the perceived better lifestyle opportunities. In some of these centres, there are housing shortages both to buy and rent.
China Relaxes Capital Controls
China has just recently relaxed its capital controls, which means it will be easier for Chinese citizens to take money out of China. This will mean that shortly we will see more Chinese people buying property in this country. For house buying New Zealand ranks the sixth most popular place to buy after the United States, Australia, Thailand, Canada and the United Kingdom. Why are the Chinese doing this? It is to diversify their financial exposures. China is still a one party autocratic state and it is very easy for them to change the rules, reducing the free flow of capital.
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.
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