News - 21 July 2008

The Alpha Update

What a Difference a Cashflow Makes!

A client of mine was recently looking for finance for his business. He needed to purchase some extra plant in anticipation of a big order. He called me and we worked out how best to approach his existing lender. Within 4 hours of his first call (and supplying some updated information) he had a letter of offer on his desk! What's more, the interest rate offered was in the mid 12% range, with a 0.5% application fee. The lender also told him that if he had called with a property deal for the same amount, the interest rate would have been 18% with an application fee of 3%!

What is the difference in attitude between the 2 scenarios? Cashflow!! The lender was far more comfortable lending to a productive enterprise that could make monthly repayments of principal and interest on the loan, than an investor or developer that relied on the sale of the property to pay the interest. Also, they were reliant on plant security where there is a ready market and a known value, rather than property where the value is "changeable" at present.

Who do you know that has a business that they are looking to buy or expand or release cash from?? If so, get them to call us Today on 021 676 747 or 0800 676 747 to find out more. WE CAN HELP!

Food for Thought

"If you aren't living on the edge, then you are taking up too much space." -- Anonymous

What's New??

• Banks looking for term deposits
• First home buyer conditions relaxed by Westpac
• 70% No-Doc and 80% Lo-Doc loans still available
• 2008 Property Services Book now available - a "yellow pages" specifically for all things property

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 Reserve Bank will announce their monetary policy update this Thursday. Most believe an interest rate cut is on the way, but likely to be in September rather than on Thursday. Why? The culprit is continued very high inflation, which needs taming before rate cuts are effective. Regardless of what Alan Bollard does, fixed interest rates of 2 years and beyond may actually rise later in the year as the continued affects of the global credit crunch make offshore funds more expensive for our banks. Keep a wary eye on progress in America!

The kiwi has actually risen against our major trading partners over the past fortnight, as we have been more stable than the US and Australian economies. This would seem to be a temporary blip and the longer term trend remains downwards.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 21 July 2008 the following Interest Rates applied:
Official cash rate 8.25% (stable)
90 day bill rate 8.45% (down)
5 year swap rate 7.44% (down)
NZ/US Dollar 0.7710 (up)

Current Range of Interest Rates for home and investment mortgages as at 21 July 2008

Floating:
10.20 to 11.50% (stable)

Fixed For:
1 Year - 9.29% to 10.95% (stable)
2 Year - 8.98% to 10.65% (down slightly)
3 Year - 8.95% to 10.85% (down slightly)
4 Year - 8.90% to 10.35% (down slightly)
5 Year - 8.85% to 10.35% (down slightly)

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.