News - 16 March 2009

The Alpha Update

The Time To Fix Is NOW!!

The latest reduction in the Official Cash Rate saw slight downward movement in the floating rate from most lenders, but a rise in longer term rates from some lenders. WHY? Because we are finally seeing risk being priced properly!

The further into the future a loan is made, the more uncertain is that future. (witness the changes to the world in the last 12 months!) Thus a lender demands a higher premium for the "uncertainty factor". Couple this with a massive increase in government spending around the globe (which has to be financed by someone and puts more pressure on interest rates) and you can see why long term rates cant help but rise.

2 and 3 year rates are still just below 6% for most lenders (at this moment). 5 year rates are between 6.5% and 6.85% for the main banks. All of these are well below their 5 year averages (just over 8%). So by locking in now, you will gain certainty of cashflow going forward. Also, because rates are likely to rise not fall, there will none of those nasty Early Repayment Fees payable if you change your mind. (based on current bank criteria).

Call me TODAY on 021 676 747 to get expert advice and let me handle negotiations with your lender. For loans due to expire in the next 2 months, we can also lock in current interest rates ahead of time.

So Call Us TODAY on 021 676747 or 0800 676 747 to Lock In Your Interest Rate NOW!

Food for Thought

“It’s not your conditions, but your decisions that shape your financial destiny”  Tony Robbins

What's New??

• Lo doc loans return at 65% LVR
• Caveat only cashflow loans up to $20,000 for short term needs

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 market was surprised by a drop in the Official Cash Rate of only 0.5%, and clear signals that we are almost at the bottom of the easing cycle. Response was muted, with lenders only dropping their floating rates by 0.5% and no downward movements in fixed rates. ASB Group in fact increased their 3-5 year rates by 10-25 basis points - perhaps a sign of things to come from the other lenders!

Macroeconomic conditions in the rest of the world continue to get worse, with production falling and unemployment rising. The kiwi has strengthened in the last 2 days against all our major trading partners because of a clear statement by the Reserve Bank that our interest rates will stay higher then the rest of the world to attract offshore capital.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 16 March 2009 the following Interest Rates applied:
Official cash rate 3.00% (down)
90 day bill rate 3.34% (up slightly)
5 year swap rate 4.15% (up slightly)
NZ/US Dollar 0.5235 (up)

Current Range of Interest Rates for home and investment mortgages as at 16 March 2009

Floating:
5.99% to 9.49% (stable)

Fixed For:
1 Year - 5.69% to 6.85% (stable)
2 Year - 5.88% to 6.99% (stable)
3 Year - 5.95% to 6.99% (stable)
4 Year - 6.30% to 7.05% (stable)
5 Year - 6.49% to 7.15% (up 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.