News - 15 December 2008

SEASONS GREETINGS AND THANK YOU TO ALL MY CLIENTS AND CONTACTS FOR YOUR SUPPORT OVER THE PAST CHALLENGING YEAR.

THE OFFICE WILL BE CLOSED ON WEDNESDAY 24TH DECEMBER AND REOPENING ON MONDAY 12TH JANUARY. FOR URGENT MATTERS, CALL STUART ON 021 676747.

The next Alpha Update will be published Monday 19th January 2009

The Alpha Update

Where To For 2009??

Having heard and read the predictions of several NZ economists over the past 2 weeks, I'll try to summarise their thoughts for the coming year....

1. They don't really know what will happen as they have never seen anything like this before. Predictions are their best guess, based on history and market theory.
2. The economic turmoil in the US will continue to drive sentiment around the world. Until the US recovers, growth around the world will be stunted. Predictions for 2009 for world growth are only just in positive territory.
3. The downturn/recession is very much global now, with China and Asia as well as the Middle East feeling the flow on effects. This has and will continue to negatively impact NZ and Australia.
4. The OCR has at least a further 1% yet to drop, maybe more if there is further significant bad news internationally. However, interest rates could rebound quite quickly if inflation becomes a problem again.
5. 2009 will be very quiet, with the first half being very tough but signs of improvement in the last quarter. 2010 will see a gradual rebound. Unemployment is likely to rise to around 6% and credit rationing will continue.
6. The kiwi is likely to drop further, to around 45 cents US. However there will likely be a rebound in 2010 as our economy picks up again.

In summary, more of the same trendfor the next few months, but late 2009 and into 2010 there should be a rebound. Stay liquid and flexible in the short term, but don't stop buying things - continued consumption is critical to a local rebound!

Who do you know who needs an experienced mortgage broker who can think creatively? Get them to Call Us Today on 021 676 747 or 0800 676 747 for a path forward in these uncertain times.

Food for Thought

"It is not necessary to change. Survival is not mandatory." - W. Edwards Deming (especially for the US car makers!)

What's New??

• Further Substantial Interest Rate Reductions
• The exit of GE continues to cause problems for their clients
• Fixed Rate Break Calculator. Email me if you want a copy....... stuart@alphagroup.co.nz

If you or anyone you know wants to know more about any of these products, email Stuart@alphagroup.co.nz

Interest Rate and Currency Comments

The expected 1.5% cut in the OCR became a reality on 4 December. Lenders reduced rates quickly after a stern message from Alan Bollard to pass on the reductions. Interest rates are largely back in the 7% range, with some mid 6% rates being offered for short term, low LVR loans. The next OCR announcement is due 29 January 2009, and it will be interesting to see the tone used by Alan Bollard at that time.

The kiwi has been relatively steady over the past fortnight, as most had predicted a substantial interest rate cut. In the medium term, the trend is downwards, however there will be wild swings both ways depending on global news, both positive and negative.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 15 December 2008 the following Interest Rates applied:
Official cash rate 5.00% (down substantially)
90 day bill rate 5.39% (down)
5 year swap rate 5.18% (down)
NZ/US Dollar 0.5450 (down slightly)

Current Range of Interest Rates for home and investment mortgages as at 15 December 2008

Floating:
7.45% to 10.25% (down)

Fixed For:
1 Year - 6.49% to 9.95% (down)
2 Year - 6.84% to 9.70% (down)
3 Year - 7.20% to 9.60% (down)
4 Year - 7.20% to 8.50% (down)
5 Year - 7.20% to 9.43% (down)

For a complete table of interest and exchange rates, click here.

The information stated herein was correct at the time of release, but is subject to changes without notice.