Home Loans Today Market Update May 2012
Current Interest Rates as at 1 May 2012
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.
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!