Current Interest Rates as at 1 May 2012
Variable 5.50%
6 Month Fixed 5.40%
1 Year Fixed 5.40%
2 Year Fixed 5.55%
3 Year Fixed 5.85%
5 Year Fixed 6.65%

Interest Rate Outlook

There certainly feels a more positive vibe in the market as the new financial year has hit. The increase in activity, which was widely predicted to occur in 2011, is now starting to appear.
This is being supported by good demand and prices continuing for our export commodities and the main cities experiencing strong demand for residential property. The continuing population increase of this country’s largest city and the Christchurch earthquake mean that these 2 cities are leading the charge and this value increase of most New Zealanders major asset, should start a flow on effect to other sectors.

The Auckland regions population is now at 1.5 million people and growing, with approximately 1/3 of these immigrants from other countries exposing the region to a diverse range of attitudes and philosophies to property ownership and investment, however it is this inflow which is driving the Auckland market, while Christchurch of course is on the back of the rebuild. This demand is now starting to push up an increase in both residential property rents and values. These increases are driven purely by supply and demand, as the shortage of houses being built coupled with the perception that prices are rising, creating strong demand in the market, even though we still get economists quoting various housing affordability statistics. We have seen residential property values rise 3.0% across the country, over the last year and are now just 3.0% off their 2007 highs. Auckland has led the charge, as it is up 5.0%, followed by Christchurch at 4.1% and Whangarei at 3.1%.

Mortgage rates have not changed since last month, having held steady since the last round of reductions in mid-February. The mortgage curve is very “?at” out to 2 years. We still believe the Reserve Bank will move rates up late in 2012 or early in 2013, this would suggest that it might be worth ?xing for 2 or 3 years. At the moment, certainty doesn’t cost much, if anything, for terms out to 2 years.

What’s Hot

The market! With money never being so cheap and banks literally fighting over each other for business we are seeing an increase in lending every month this year, with each month being larger the previous for 5 consecutive months now, it’s great to see – Refer your clients now!

We could be excused from feeling like it is a case of last one out turn out the lights with the outflow of migration being the highest it has been in NZ since 2001. Yes there is an outpouring to the perceived ‘lucky country’ in Australia with some 38,000 leaving our shores last year, this is offset somewhat by the inflow of 35,000 from other parts of the world, creating only a slight migration deficit which is nowhere as bad as it may appear. The outflow of Kiwi’s to Australia is certainly attributing to the stalling of our economy but the reality is nowhere near as bad as the perception. Of course one of the things that our Kiwi cousins need to consider is the higher cost of property and living on the other side of the ditch and while employment opportunities may be more plentiful the cost of getting into property can offset this benefit.

So we have immigration working against us and there is still a focus from Kiwi’s of deleveraging their balance sheet (or in layman’s terms repaying debt before entering into new purchases) which together with a continued lack of housing stock attributes to holding our growth back.

However, the stock that is hitting the Real Estate market is certainly moving quickly particularly in Auckland and Christchurch where average days to sell in both areas is now under 30 which is the lowest in over 2 years.
In relation to interest rates, we continue to enjoy historic lows which are helping with mortgage affordability. There is currently little to no difference between floating and 2 year fixed money and it is only if clients look to fix for longer than 2 years is there an increase in interest rates carrying a small cost for the extra certainty of a long term fixed rate. So what to do? It really depends on your personal circumstances, be 100% certain that you are not looking to sell your house or make large lump sum principal reductions during the period that you fix your interest rate for but if certain of these facts we do see great value in being able to lock in now for low to mid 5% rates for 2 to 3 years.

Variable 5.60%
6 Month Fixed 5.40%
1 Year Fixed 5.45%
2 Year Fixed 5.55%
3 Year Fixed 5.85%
5 Year Fixed 6.65%

Interest Rate Outlook

As mortgage interest rates remain low they continue to provide fuel to the property
market. January house sales volumes lifted for the third successive month, with strong sale prices offset by an on-going lack of available houses on the market. This shortage is continuing to drive prices up.

Tempering the growth is the unstable employment market and continuing desire of households to pay down debt. These factors together with the uncertainty created by overseas economies will prevent any major boom in the property market.

While the Reserve Bank do acknowledge that the property market is showing healthy signs of recovery they still have their focus centred on the European debt crisis, and all the noise coming from the Reserve Bank indicates that any interest rate movements to our OCR will not occur until the back half of this year.

While internationally, liquidity continues to hold other economies back, locally we would describe the economy as irritably making progress, meaning that while it is not easy we are making moving forward, a dynamic that is likely to continue through 2012.

Mortgage rates ased further last month but only in the longer term 3 – 5 year fixed rates. Although this has made it cheaper to fix for 3, 4 and 5 year terms, these rates are still very high relative to shorter term rates. Similar to last month there is very little difference between floating rates and 1 – 2 year fixed rates – as such we still believe that the best options currently in the market are to either float, look to fix for 2 years or take a combination of both, splitting your debt.

What’s Hot

Free Money – get it now! The banks are currently running some crazy incentives with some giving away as much as $1,000.00 as an enticement for clients to take their mortgage with them. You will be surprised by the attractiveness of what we can get for you – Refer your clients now!

Kind regards

Kevin Cammell

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!

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.

Current Interest Rates as at 1 November 2011

Variable 5.60%
6 Month Fixed 5.59%
1 Year Fixed 5.59%
2 Year Fixed 5.89%
3 Year Fixed 6.45%
5 Year Fixed 7.25%

Interest Rate Outlook

Well, that’s one gorilla off our back! (& thank goodness!). Not unlike RWC, success is going to take the sum of many parts working together before we will win and of course there are still those variables we cannot control, (think Referees here) such as the state of the European & American economies which unfortunately our banks still have to head toward for funding. We will always be susceptible to their financial stability but that is a “known” by our banks so more & more they are trying to limit the amount they need to fund offshore, (similar to taking the referees decisions out of the game).

Internally, our economic engine continues to be our rural sector and while commodity prices have come back somewhat the market is still strong. The rural surge is timed nicely with the historically low interest rates allowing farmers to reduce debt, freeing up some internal bank capital. Our beautiful country is also set for a tourism boom on the back of what the world has just seen and this should assist the retail sector continue their strong year on the back of RWC.

So there appears to be money flowing in our economy, we just need to ensure this is best utilised, not unlike the farmers, reduction of debt should possibly be many individual’s focus.

Sustained low interest rates are also helping the housing sector as we see the average days to sell houses continue to drop and many examples of multiple offers being placed properties, a momentum we believe will carry through the traditionally buoyant summer months.

As for a current borrowing strategy, variable rates look set to remain at current levels through until mid-2012, accordingly, the floating rate looks the best option right now, although 1 year & 18 month rates are practically the same and provide some nice stability of payment. For those prepared to pay a small margin of 0.25% – 0.50% you can now lock in for 2 years.

If you’re mortgages are coming off fixed interest rates Home Loans Today can help negotiate for you with the main banks. Please do contact Kevin if you would are looking to refix your mortgage.

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!

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.

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.

Variable 5.40%
6 Month Fixed 5.59%
1 Year Fixed 5.55%
2 Year Fixed 6.20%
3 Year Fixed 6.70%
5 Year Fixed 7.45%

Interest Rate Outlook

Should I stay or should I go now? If I go there could be trouble, if I stay there could be double….
This rock song classic by the Clash sums up consumers’ attitudes toward interest rates at the moment. Should I fix now or should I stay floating?

The consensus of most is that you should fix your interest rates soon, but when, should you do it now or can you squeeze another month or two out at these basement rates of under 6%?
As the bank economists sat glued to their IPad, IPhone, Blackberries and some even the old fashioned computer or worse still the archaic radio for Reserve Bank Governor Alan Bollard’s address last Wednesday, most were left none the wiser as to whether now is the right time to lock in. Dr Bollard certainly has indicated that rates are going to rise this year, although exactly when nobody is sure.

You get the impression he would like to move now but is very concerned about the strength of our currency (or more so the weakness of the US) and this may be the sole factor in holding rates back to their current level. As such it doesn’t really put us in control of our own destiny when it comes to rates as we are reacting to events in the US & Europe as their debt crisis worsens.

We pick that he will move in September and the move could be as high as 0.50% which will see a groundswell of consumers running to fix their interest rates. Be aware though that as demand for fixed rates increases so may the price & we would not be surprised to see fixed rates move out before the variable rate moves.

Our advice is to not be too greedy now as it may cost you in the future. It may be worth considering locking in part or all of your mortgage in the next month or so because, let’s face it, interest rates sub 7% locked away for a period of time don’t look too bad!

What’s Hot

Fixing your interest rate! As many of our customers get nervous they are flocking from variable interest rates into fixed rates. Nobody knows when but at some stage this year rates are going to rise and often it is the fixed rates that move before the variable, so fixing now does make sense.