News - 11 May 2009

The Alpha Update

The Benefits of Lender Diversification

In the current climate, lenders are being very picky about who they lend to. Having a current mortgage with the lender who you are talking to is a positive factor as they can see an established loan history. But there is also a risk in having all your business with one lender, as changes in rules can cause big problems if you need cash in a hurry or have borrowed to the maximum of your capacity.

So the plan is to have split lending relationships for your personal and business or investment borrowings. Having your personal mortgage with lender A and your investment portfolio funded with Lender B (and C, D etc if large enough) gives you flexibility, risk minimisation, bargaining power, and potentially even some tax benefits. The key is to develop a plan at the outset and work the plan for your maximum benefit.

(Banks hate this by the way, because they would prefer to tie you up completely. But you have to mitigate the risk of them changing their rules - as we are seeing at present)

Who do you know has all their lending with one institution? Get them to call me TODAY on 021 676747 or 0800 676 747 to develop a plan and increase their options.

Food for Thought

Raymond Hull said, "He who trims himself to suit everyone will soon whittle himself away."

What's New??

• Property Plus Seminar - How to buy and sell property with little or NO CASH www.propertyplus.co.nz
• All your Property Maintenance needs sorted the easy way www.maintaintoprofit.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 Reserve Bank surprised the market a little by dropping the OCR by 0.5% and stating that it expected to leave the OCR at current levels until late 2010. This has finally seen some movement by lenders in reducing their short term fixed rates by 0.2% - 0.4%, although this has taken some time. No one has yet reduced their floating rate as there is continued pressure on wholesale funding. This pressure is across the board and is largely linked to the deficits that need to be funded by governments across the globe. Internationally, the cost of capital is rising and this will flow through to our fixed rates from here on.

The kiwi has shot up again over the past fortnight as demand for more speculative currencies has returned and demand for the US dollar as a safe haven has faded. This trend is likely to continue as the global economy starts to (slowly) rebound. But there will be many rollercoasters as economic news varies between the positive and the negative.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 11th May 2009 the following Interest Rates applied:
Official cash rate 2.50% (down)
90 day bill rate 2.89% (down slightly)
5 year swap rate 4.90% (up)
NZ/US Dollar 0.60.46 (up)

Current Range of Interest Rates for home and investment mortgages as at 11 May 2009

Floating:
5.99% to 7.95% (stable)

Fixed For:
1 Year - 5.50% to 6.79% (down slightly)
2 Year - 6.09% to 6.99% (stable)
3 Year - 6.65% to 7.25% (stable)
4 Year - 6.99% to 7.55% (stable)
5 Year - 6.90% to 7.75% (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.