News - 14 May 2007

The Alpha Update

Lo Doc Loans - What Are They and How Can They Work For Me?

A Lo-Doc loan (also referred to as a No Financials loan) is a loan option available for people who can’t (or don’t want to) provide proof of income sufficient to satisfy the bank.

Essentially, the lender is relying on the value of the security offered to make the lending decision, with the client self-declaring their income. These loans are very useful in a wide range of situations, such as:

• Self employed people with accounts that minimise their profit to save tax
• Property investors who are aggressively growing their portfolio
• Commission sales people and salary earners who have a large bonus component in their package
• People with investments that can be sold to repay debt and/or provide interest payments
• ...and many other situations where there is good security available

Lo-doc loans are offered by both the major banks, and numerous non-bank lenders. Interest rates and fees are now much closer to bank rates and lenders will lend as much as 90% of the value of the property (although 80% to 85% is the norm). There are differences among the offerings, so you need an expert to show you which lender is right for your situation.

Who do you know who might fall into one of the categories listed above? Get them to call Stuart Duncan at Alpha Financial Solutions on 021 676 747 or 0800 676 747 to find out more. We can help!

Food for Thought

I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen - Frank Lloyd Wright

What's New??

YOU CHOSE THE INTEREST RATE!! I have two lenders now who will provide fixed rate loans where you can chose an interest rate that works for your cashflow, even if it is lower than current bank rates! The difference in interest cost is added to the loan balance, with the expectation that capital gain will more than compensate for this over the long term. Call me NOW on 09 524 6062 to find out more!

Interest Rate and Currency Comments

The predicted stability in interest rates has become fact, with little movement in longer term rates and only small upward movements in shorter term rates. The market and the Reserve Bank are waiting for economic data over the next few weeks to confirm ongoing activity levels before making any more changes. Kiwibank is offering some short term discounted interest rates to buy market share.

The US dollar has stabilised in the past fortnight, thus the kiwi has also stabilised and in fact dropped slightly against our trading partners. There continues to be strength in the local economy, so exchange rates will remain high for some time yet.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 14 May 2007 the following Interest Rates applied:
Official cash rate 7.75% (stable)
90 day bill rate 8.08% (stable)
5 year bond rate 6.80% (stable)
NZ/US Dollar 0.7272 (down from 0.7392)

Current Range of Interest Rates for home and investment mortgages as at 14 May 2007.

Floating:
8.80 to 10.05% (stable)

Fixed For:
1 Year - 8.20% to 9.60% (up slightly)
2 Year - 8.20% to 9.80% (up slightly)
3 Year - 8.10% to 9.70% (up slightly)
4 Year - 7.95% to 9.51% (stable)
5 Year - 7.95% to 9.17% (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.