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Home Loans Today February 2012 Update:

Current interest Rates as at 1 February 2012

Variable                  5.60%
6 Month Fixed         5.45%
1 Year Fixed            5.55%
2 Year Fixed            5.65%
3 Year Fixed            6.10%
5 Year Fixed            6.90%

Interest Rate Outlook

It would appear that 2012 has kicked off with some continued momentum from late last year as many of our Advisers have returned from their break to particularly busy diaries.

December continued on the strong trend of November in house sales, with consecutive strong months seeing increases in sales of circa 5% each month. It would appear that the elongated period of historic low interest rates is finally starting to push some confidence across consumers. This, together with the nation waking from its rugby world cup hangover, is driving the strongest level of activity we have seen for a couple of years now.

The Real Estate market is still being held back though by a genuine lack of quality stock across the country – and this is seeing the average days to sell a house drop (now down to 39 days). We believe this will continue to ease further over coming months, giving the market some momentum.

Approximately 60% of Kiwis are currently sitting on a variable rate mortgage, which gives the Reserve Bank great confidence that they can actually influence consumer behaviour with interest rate movements if and when they have to. That said, they have signalled that they do not expect to have to push interest rates up until the 2^nd half of this year.

As the 1 & 2 year rates fell in the back quarter of 2011 it has seen a flattening of rates from variable through to 2 year fixed. As such there is little to no difference between variable and 2 year fixed rates. Given that we anticipate small increase in variable money later this year, the current 2 year fixed rate holds appeal for us as a sound borrowing strategy – or for the slightly more adventurous splitting the funding into 2 accounts of part 2 year fixed and part variable will ensure not missing out on any variable rate discounts if they were to come on offer. All in all, quite an attractive time to borrow money!

Home Loans Today December Interest Rate Review:

Current Interest Rates as at 5 December 2011

Variable 5.60%
6 Month Fixed 5.59%
1 Year Fixed 5.55%
2 Year Fixed 5.65%
3 Year Fixed 5.95%
5 Year Fixed 6.95%

Interest Rate Outlook

Don’t turn on the news if you want any light relief – even though we got through the election rather painlessly we are still subjected to painful scenes every night. Most of which come from overseas and it is not uncommon to see 3 or more clips of rioting or fighting amongst citizens of the same country.

The financial stress that the world economy is under adds fuel to simmering tensions that run through many countries and right now every day it appears that Europe gets worse, as economic instability spreads from Greece, though Italy, France and even on to the previous impregnable Germany. It is at times like this that the tyranny of distance can be our friend, although while we are removed from the violence (except for some smelly campers in our cities) we see, we are not removed from the economic pressure the bad debt crisis in Europe is generating.

Fortunately for us all, this pressure has currently resulted in an easing of long term fixed rates and for the first time in some months we saw a reduction of interest rates in the 2 & 3 year fixed periods. How long this will last or whether it will continue is too difficult to know, however it now sees Variable and Fixed Interest rates closer than they have been for some time.

As such, the question that is now common, is should I fix my rates now? There is no right or wrong answer to this question although with 2 year fixed rates now matching variable there is no longer a dollar cost in buying some stability. It is just some flexibility that clients will forgo by locking in now.

The question of will interest rates go even lower is also a hard one to answer, while we are at historic low rates there is no guarantee that if the above European issues worsen that we will not see further interest rate cuts across the world. Given there is so much uncertainty perhaps the best strategy could be splitting your loan into part variable and part fixed @ a mid-term rate.

If you are looking for a free review please do contact Kevin on 021532569.

Home Loans Today – October Report 2011

Home Loans Today Mortgage News October 2011

Current Interest Rates as at 5 September 2011
Variable                 5.60%
6 Month Fixed         5.60%
1 Year Fixed           5.75%
2 Year Fixed           6.20%
3 Year Fixed           6.70%
5 Year Fixed           7.40%

Interest Rate Outlook
Occasionally the tyranny of distance can be your friend and being a little isolated and removed from the debt crisis fallout in Europe is certainly a good thing at this juncture. However while activities in these larger markets do have an impact on our funding cost the severity of their impact is lessened. Nonetheless, the financial mess that is Europe is likely to see interest rates held at their current low levels here until first quarter of 2012.

Locally, while the property market remains flat it is being readied for a strong 2012 on the back of the Christchurch rebuild and we are already starting to see positive signs in the powerhouse Auckland market with well-priced houses moving very quickly.

Of course we are half way through one of the strongest economic spend booms of the past 5 years thanks to the oval ball, but this light relief really will be a temporary measure, however it does clearly add fuel to our positive growth.

As we enter the last quarter of 2011 we can’t see markets this year in Europe moving enough to put any pressure on interest rates internationally and therefore locally, as such we believe that it may not be until the end of first quarter or mid second quarter of 2012 before we see any movement in interest rates.

With the potential sting out of any interest rate rise for the immediate future we are reverting to our recommended strategy of early this year and suggest that the price of variable interest rate money at the moment is too good to pass up and with little risk over the next 6 months we should all enjoy the mid to high 5% interest rates currently available.

However, the above strategy does come with a caveat. You need to keep your eyes and ears open for when rates do start to move in 2012 as we are at current record lows and at some point in 2012 it will be wise to lock in for a period at these historically low rates.

What’s Hot
There is only heat on one thing at the moment, the mighty All Blacks, even non rugby followers cannot help but be caught up in the hype that is RWC and haven’t we as a country done ourselves proud, it is great to see how we have embraced the tournament – Go The AB’s!

Home Loans Today – September Report 2011

Current Interest Rates as at 5 September 2011

Variable 5.40%
6 Month Fixed 5.60%
1 Year Fixed 5.55%
2 Year Fixed 6.20%
3 Year Fixed 6.70%
5 Year Fixed 7.40%

Interest Rate Outlook
Predicting Interest rates is as difficult as a game of charades with children right now. No sooner does there appear to be the movements of recovery in NZ & demand for fixed interest rates and the next thing the global debt crisis worsens and we all start second guessing each other.

Clearly our friends in the US and Europe are along way out of the woods in relation to their debt and funding troubles & this affects us, as due to our size we fund a good portion of our residential mortgage book on the international money market.

As Europe & the US scramble to keep their credit rating and head above water the price of fixed term money remains low and our earlier concern that fixed interest rates could spike has eased.

Locally, we are still showing signs of recovery with housing consents starting to move upward and the level of mortgage approvals up some 20% on 2010 indicating activity is definitely on the increase. Furthermore as soon as the government can coordinate the Reinsurers overseas to provide cover on new houses built in Christchurch going forward the market will really kick as currently this is stifling the rebuild and recovery in the region.

With so many variables outside of our control it does not give anyone much confidence to make bold predictions and while the fixed rate pressure has eased, we still feel the above international debt crisis has only delayed the inevitable rate increases. We do not believe we will see rates increase in September now as originally thought and this could be pushed out to as far as the end of the year, providing more breathing space around these sub 6% interest rates.

Put simply if you are of conservative nature, the current sub 6% rates for 1 year or low 6% for 2 years still look appealing, if you are more aggressive and are prepared to keep an eye on the market the current variable rates are still the cheapest option. The only option we currently have any confidence in is to have a dollar each way by fixing some and having some on floating.

What’s Hot
As the above outlines the finance market sure is a fickle place and majority of our clients really are confused as to what the right thing to do is in relation to interest rates right now. The single biggest demand we currently have is for advice on interest rate strategy – see above for ours.

Tips on how to Make Money from Property:

There are  three ways I know on how to make money from property:

1)      Buy wholesale from the property market

2)      Buy before the next boom in the property cycle.

3)      Adding value to the property through renovations.

Why Renovate Properties?

1)      Run Down properties are easier to find in the market.

2)      Easier to negotiate the price down on a property that needs to be renovated.

3)      Renovations in a raising market will add value straight away.

4)      Renovated properties increases rental returns.

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