News - 9 July 2007

The Alpha Update

Making sense of mortgages

If you’re new to buying property and have never had a mortgage before, the loan products offered and the terminology used can seem very confusing and intimidating.

Banks will talk to you about interest only versus principal and interest, fixed and floating rates, as well as revolving credit. Setting up the right mortgage structure for your lifestyle is as important, if not more important, than just securing a good rate. The correct loan structure will save you more money over the term of the loan than a 0.25% difference in interest rate!!

As with any financial decision, spreading the risk is often the wisest move. Lately, I’ve been advising clients to split their mortgage into segments, part at a floating rate and part at a fixed rate. Within the fixed portion, some people are going a step further and having staggered renewal dates. The idea is to avoid having all your "eggs" in one interest rate "basket" and having to refix all your lending at an unattractive higher rate. More that one client has changed their mortgage over to interest only while one parent stays home with the young family, until the children are at school.

No matter what your circumstances, there is a way to get on the property ladder. At Alpha Financial Solutions we find the loan structure that works best for you.

If you or anyone you know is looking for a new mortgage and wants the best structure available, contact Stuart on 021 676 747 or 0800 676 747. We don’t have a crystal ball, but we do have over 20 years of experience and a wide range of options available. Give us a call today.

Food for Thought

Most men die from the neck up at the age of 25, because they stop dreaming - Ben Franklin

What's New??

What does it take to give up your day job and become a full time property investor????

I have some exclusive tickets to the next Auckland Property Investors Association one-day seminar on 29th July that will help you answer this question. What's more, I can offer you a discount of $200 per person on the ticket price!! Call me now for the registration form.

Interest Rate and Currency Comments

Interest rates have (finally) been very stable over the past fortnight, with only slight decreases in the 3 and 4 year rates. In general, the market is playing wait and see as to what the Reserve Bank will do. There is widespread expectation that the Official Cash Rate will rise again before Christmas, it is just a case of when. What is even more certain is that interest rates are unlikely to fall substantially in the next 12-18 months.

The kiwi has continued to climb towards 80 cents against the US dollar and has strengthened against our other trading partners. Whilst the rise has been reasonably quick (almost 10 cents against the US dollar in 6 months), the inevitable fall (when there are signs of interest rates stabilising or falling) will be very rapid!

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 9 July 2007 the following Interest Rates applied:
Official cash rate 8.0% (stable)
90 day bill rate 8.37% (stable)
5 year bond rate 7.15% (down slightly)
NZ/US Dollar 0.7819 (up from 0.7640)

Current Range of Interest Rates for home and investment mortgages as at 9 July 2007.

Floating:
9.0 to 10.30% (stable)

Fixed For:
1 Year - 8.90% to 9.93% (stable)
2 Year - 8.75% to 9.81% (stable)
3 Year - 8.70% to 9.73% (down slightly)
4 Year - 8.60% to 9.86% (stable)
5 Year - 8.75% to 9.80% (stable)

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.