News - 15 September 2008

I will be out of the office from 21 September until 30th September inclusive. In my absence, please call Andrew Macready on 579 4782. The next Alpha Update will be 6 October 2008.

The Alpha Update

Pricing for Risk

With the credit crunch still having a major impact on the cost of offshore money for our lenders, they are increasingly introducing risk based pricing. For example, TSB's 2 year interest rate for borrowers with at least 20% equity (ie: 80% LVR) is 0.36% lower than the rate for those with an LVR over 80%. Sovereign Home Loans are applying an extra margin of 0.5% for all lo-doc loans over 70% and a 1% margin for specific "high risk" occupations. Low Equity Fees are becoming much less negotiable (if at all) and interest rate discounts again depend on the risk (ie: LVR) involved.

However, there are significant differences amongst lenders at present.

What does this mean for you? You need a great mortgage broker to do your research for you, and shop around for the best deal that fits YOUR SPECIFIC CIRCUMSTANCES. The rules are changing regularly, as are interest rates offered by the lenders.

Who do you know that needs finance now? Get them to Call Us Today on 021 676 747 or 0800 676 747 for a Free Review of their finance options. WE CAN HELP!

Food for Thought

"Act as if it were impossible to fail."  -- Dorothea Brande

What's New??

• Substantial interest rate falls
• Positive demand for residential and commercial properties across the country that are priced properly

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 everyone with a drop of 0.5% in the Official Cash Rate last week. They also gave banks a strong indication that they expected interest rates to fall as a result. The banks did what was expected and dropped floating rates by 0.5% and most fixed rates by between 0.2 and 0.4%. Almost all fixed rates from the main lenders are now down under 9% now. However, these changes will take some time to filter through as many borrowers are locked into existing fixed rates. Look for further drops between now and Christmas.

With the sharp drop in our local interest rates and continued major financial uncertainty in the US and UK, the kiwi has been sold off rapidly in a "flight to quality". After dropping as low as 65 cents US on Thursday, it has recovered a little ground and now sits at 66.5 US cents. However, against the aussie, the kiwi has remained almost static as the two currencies fall together. The roller coaster ride will continue for some time to come, particularly this week due to the major uncertainty surrounding Lehman Brothers in the US. The long term trend remains downwards.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 15 September 2008 the following Interest Rates applied:
Official cash rate 7.50% (down)
90 day bill rate 7.80% (down)
5 year swap rate 6.83% (down)
NZ/US Dollar 0.6650 (down)

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

Floating:
9.70 to 11.00% (down)

Fixed For:
1 Year - 8.80% to 10.85% (down)
2 Year - 8.48% to 10.65% (down)
3 Year - 8.39% to 10.55% (down)
4 Year - 8.70% to 10.35% (down)
5 Year - 8.80% to 10.35% (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.