NEW POLL ----->

Not rocket science......but who would you go with if you had to borrow today. Dont think about just price and dont be restricted by your current circumstances. Imagine that old aunty of yours finally kicked her clogs and gave you 20% deposit to buy a house.....who would you choose?!

Has the Horse Bolted?

Thats a good question Dave, yes it is Dave.....and one that i really dont know the answer too! Suffice to say that long term rates have as you will have observed shot up and our friends at the Reserve Bank arent too happy about it!

What i do know is that the rates landscape has changed and most now will give more than a passing glance at the floating rate when making their decisions on loan structure. Approximately 85% of all loans in NZ are fixed whereas across the Tasman the reverse is true.

At the moment clients are considering a split in their structures, some short some medium and some long.....perhaps a little bit on floating. The net result of this is some protection from rolling off a rate onto a bigger one, still have the certainty of fixed rate payments but also some ability to pay off principal as and when you wish to.

As a structure it may not be the cure all for everyone but it does cover most of the bases, a bit like taking a box trifecta in a three horse race.....you wont win much but you will win!

The Grinch Who Stole the Rates!

interest.co.nz describes it as March Madness and certainly rates have turned on their head and quickly. Suggested pressure on long term rates has turned into reality and the big increase are in those 3-5 year rates.

For prospective borrowers the main thing is that we can see competitive differences between the lenders open up and there are reasonable differences between lenders under certain rates.

So you can compare apples with apples decide how long you wish to fix for without considering price.....think about the factors that influence that....job security, the possibility of having kids and going down to one income, the liklihood of selling within a certain timeframe.....these factors are just as important as interest rate. And if its certainty you want then look to lock in long.

Then once you have decided that let's say those factors indicate a 2 year fixed rate........well then its not rocket science to consider anyone aside from ANZ National.

We'll always work with you to explore those options but dont ignore those lifestyle factors that can help us to determine the best options!

Rates again!

Well 5 year rates have moved again with the pressure on lenders margins forcing most up to the 6.75% mark. I read some interesting words from Matthew Gilligan on his blog which you can find on http://www.familytrusts.co.nz/blog/

Matthew is one of the partners at Gilligan Rowe and Associates, an Auckland based Chartered Accountancy practice, who provide full range accountancy servies but have specialised in advice for property investors.

As for me there is enough news out from the lenders to make me think that folks should consider seriously locking in long.

Rate Update

As suggested ASB have also dropped their variable rate to 6.4%. ANZ have also introduced a 3 month special of 5.65%.

On the other end of the scale ASB and Sovereign have increased their 3, 4 and 5 year rates leaving many borrowers in a quandry. A lot of borrowers are on floating rates waiting for the right time to hop onto a low low long term rate. This move by lenders may see a good number take what is on offer now.

I personally think that one of the big players will make some real cuts with a selected long term rate soon (or soonish) but wouldnt argue with any client who locked in at 5 years now.

OCR and rate update

Well the Mole was a bit hopeful with the Reserve Bank dropping the OCR by 50 points and making it clear that there is likely to be one more to go. It is also becoming clear that lenders are not going to pass much of this on beyond reducing their variable rate.

At this point ANZ and National have moved their floating rate down to 6.45% and Sovereign has dropped to 6.4%, meaning ASB will likely announce same in the next few hours.

OCR predictions

Hi everyone, well here's some thoughts from the Mole.....David can't be seen to be making predections on rates and that sort of thing so it's down to me to put my thingies on the line and give it a shot!

The Mole reckons that Mr Bollard will drop the OCR by 75 points and suggest in his brief that that could be the lot. But the Mole reckons that we'll see one more drop after that of around 25 points.

What will the banks do?

Big question that one.....Mole reckons they will drop an average of 50 points of the variable rate and then varying amounts (of around 20 points) off the 6 month through to 3 year rate with no change on their 4 and 5 year rates.

Big prediction will be that either one of Kiwibank or BNZ will see the opportunity to go hard out for market share and introduce a cut price 5 year rate that will knock everyone's socks off and force the other major lenders into another reduction in their long -term rates.

Well lets see what happens tomorrow and beyond.....

Ta ta for now

The Mole

What's new at Westpac

In the past 6 months Westpac have continued to provide high LVR lending to the right sort of client. In recent weeks they have significantly tightened up and once over 80% lending all the boxes must be ticked for any approval to take place. Pretty high on the list is the calibre of the applicant, what sort of job they have, how long have they been in the role.....yup they've become tougher but I'd far rather have that than a blanket 'no way if it's over 80%'.

On the back of tougher credit assessment is an increase to the margin they apply to the interest rate when lending above 80%. It used to be 0.15% but now its 0.25% between 80.01%-85% LVR and 0.50% at 85.01% LVR and above.

ANZ and National new rates and comment

The ANZ group have dropped their 6 month rate to 5.79%, 3 year rate to 5.99% and the 4 year rate to 6.4%.

Credit policy with each of these banks remains extremely tight. There is no movement above 80% on owner occupied and 70% is a desirable mark for rentals. It does seem that their appetite for new business is very low and given this fact we do less business with them than in the past....its just too hard!

Is it the Right Time to Buy???

Well the question had to be asked here after the Herald's headline today......"Expert's tip: Now's the time to buy a house".

The expert was of course BNZ chief economist Tony Alexander and his suggestion does come with some conditions with job security coming top of that list. But his comment are general positive and it was a welcome change to read the Herald front page and find it not containing doom and gloom around the property market.

In short, he predicts a further 5% drop in the market, a period of stability with rises next year.

Kieran Trass focuses on renewed investor interest and the fact that many properties now are cashflow positive and on the inside page there is a further article on shortage of good rental property and the likely lead into increasing rents. Cheap houses, low interest rates and rising rents do make a good recipe for investment.

Certainly these comments echo the past week or so at Auckland Home Loans where it has been hectic. Plenty of interest from new and existing clients and the smiles are returning to many of our real estate colleagues.

Would love to hear what you think on this one.....would you buy now.....or still hold awhile?

Wow....Who hit the Go Button!?

All of a sudden things have become very busy here and all of the team are pretty much flat out at the moment. I wonder if we are typical of what's happening around the place? Perhaps the good real estate folks who tune in here can pass some comment or maybe some of the Home Loan Group consultants from around the country can tell us what going on in their neck of the woods?

I'd imagine that the first lecture in the first term of Economics 101 would be on supply and demand. A lot of the stock that was on the market 12 months ago did'nt sell (high rates/nervous buyers) and were withdrawn. Now I hear of an absence of good stock, plenty of buyer inquiry and even tales of multi offer scenarios!!!

The question is.....will this environment of short supply and increasing demand have a positive effect on the property market?

Would love to hear your thoughts!!

Rate Update

More good news on the rate front over the weekend, but also i think something for all of you on floating rates to watch out for. ASB and BNZ dropped their short rates, BNZ at 6 months and ASB at 1 year but notice that ASB have popped up their longer rates at 4 and 5 years.

Despite what some might think the banks arent daft and as more and more break rates and take the 6 month and variable rate options they will be looking to make some better margin on the long term rates. Only a month ago ASB was 5.95% across the board....now theres a 55 point gap between their 6 month and 5 year rate.

When the floating and variable rates hit rock bottom it will be interesting to see what the long options are and if the lenders have built a little in there anticipating an ability to lock in clients for the long term on good margins.

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Westpac Rate Drop

Effective Monday Westpac have dropped their floating rate to 6.49% and their 6 month rate to 5.79%

Welcome!!!

Hi everyone, welcome to day one of NZ Mortgage Musings! Hope that you find something of interest (no pun intended) on the site whether you're in the property game, an investor or a potential first home buyer.

Whilst I'll pop in here from time to time and post my own news and views, the Musings will work best when brains better than mine contribute their thoughts.

And if you're browsing and there's a question not covered by any posts please feel free to email me and we'll get things answered for you.

Thanks for stopping by,

Dave