Latest Economic Commentary &
The Housing Market
LVR Lending Restrictions
The Official Cash Rate (OCR) and commentary
Fix or Float your mortgage
April evidenced a cooling in the housing market and
noticeably more properties are passed in at auction with negotiations
happening after. There are less
buyers, who are now having more of a say in what they buy. The Asian input is often into
sub-divisible land or in anticipation of Auckland’s proposed Unitary Plan and/or
school zones – Asians will typically pay 10% more than rival ‘all-comer’
bidders. It is therefore
concentrated into certain areas (or school zones) where they have a
noticeable presence – many of them will be citizens..
Auckland prices have seen growth outstripping new home buyer’s ability to
get themselves into housing, we see an increase in the percentage of
renters, and possibly New Zealand through Auckland is showing the first
signs of home ownership being unreachable – as in many other countries.
countryside is lagging behind Auckland and Christchurch in
growth. Outside of these the fastest
growing areas are Pukekohe and Hamilton.
LVR Lending Restrictions
are restricted to lending no more than90% of the house value. Sometimes we may be able to get an extra
5% on second mortgage but definitely restricted to high income earners and
professional people. These LVR restrictions
could be removed at the end of the year but don’t hang your hat on it.
90% finance for a new build (not newly
completed) is no problem.
80% or below is generally not a
problem provided serviceability is evident.
Note in some cases we are able to obtain
personal loan finance to help with the deposit but banks want to see 5%
Official Cash Rate (OCR)
Monetary Policy Statement & OCR
Monetary Policy Statement & OCR.
The tightening cycle has started with the first OCR change in 3 years of
0.25%+ announced on 13/3/14. There
are signs of increased productivity lead by our manufacturing sector. This gathering momentum (still early
days) is creating inflationary pressures and hence the recent rise in the
OCR. Currently the anticipation is
further tightening by raising the OCR another 2% over the next 2
years. That would put floating rates
in the vicinity of 7.5%-8.0%. There
are still downside risks and like the weather forecast, rates don’t always
perform as initially forecast.
Watch’, delivered direct to your ‘in-box’,
will help give you advance notice of expected or pending changes. This commentary - available by emailing firstname.lastname@example.org
- is comprehensive and should be requested. It is also ongoing.
Fix or Float your Mortgage
mixing fixed rates (2 & 3 years) with floating to spread the risk. However every situation is different and
we suggest you contact us to help you with your own position – you don’t
need to be an existing client.
- Basic Philosophy. Fix long when rates are low; fix short or
float when rates are high. Believe
me, that the temptations because of bank ‘specialist’ offers will often be
the opposite. Remember fixing gives
you certainty and sometimes there is a tradeoff with cost.
Our Bible – Exceptional service… defined as
thoughtful, proactive, knowledgeable and timely communication.
at email@example.com for
individual consideration. You deserve it.
don't hesitate to email or phone us if you are contemplating buying a
property or properties whether for yourself or for investment. We will look
at your situation now and what you want to achieve in the future, so that
we can structure your borrowing with the right package from the right
lender for you. All this is backed by our Unique Performance Guarantee.
Disclaimer: This information is
intended for general information only and IFL Associates Ltd,
Mortgagehelp.co.nz Ltd or the author accept no responsibility for any
action or interpretation taken as a result of using this information.
You do have the opportunity to put in place a plan authored by ourselves
tailored to your individual situation.