News - 19 January 2009

Happy New Year. I trust you all had a safe and relaxing Christmas break wherever you were.

The Alpha Update

A summary of the past 4 weeks of news.....

The Good Bits:

• Interest rates have started dropping again on expectations of at least a 0.75% drop in the OCR on 29th January. Talk is for the drop to be as much as 1.5%!
• The American car industry finally got a partial bail out
• Petrol prices have dropped, although they have started rising slightly again as the kiwi dollar falls. Inflation expectations are also falling.

The Bad Bits:

• Retail sales over Christmas were worse than predicted across the country.
• Business confidence has slumped dramatically, with around 1/3 of businesses expecting to reduce staff and/or reduce capital spending in the year ahead.
• Hints of a downgrade of New Zealand's sovereign credit rating were made last week.
• The global economy remains very weak, with economists predicting a very tough 2009 for the US and European markets.
• Local lenders continue to change their credit policies and enforce tough standards throughout.

2009 is shaping up as a year of challenge and opportunity. The challenge is to stay safe and capitalise on the business and investment opportunities that will exist this year. Sound financial advice will be critical to making the most of opportunities in 2009.

Who do you know who needs an experienced mortgage broker to help make the most of the current opportunities? Get them to Call Us Today on 021 676 747 or 0800 676 747 for a path forward in these times of challenge and opportunity.

Food for Thought

"The difference between stupidity and genius is that genius has its limits." - Einstein

What's New??

• Expectation of further Interest Rate Reductions come 29 January
• A growing difference in credit policies across lenders
• Fixed Rate Break Calculator. Email me if you want a copy....... stuart@alphagroup.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

With business confidence in the doldrums in the December survey and global economies still hurting, there is substantial pressure on the Reserve Bank to continue their series of interest rate cuts. Given that lenders keep credit flowing and pass on these cuts, it will allow NZ to rebound sooner than the UK or US. Government policy will also have an impact on how the next 6 months or so plays out. The bottom of the interest rate cycle is coming, so be prepared to move quickly to lock in the current advantage.

The kiwi has continued its downward trend although it has swung as high as 60 cents US and back down to 53 cents. The decline against the aussie is less dramatic but the downward trend remains. Look for the US dollar to strengthen slowly and thus force our cross rate lower.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 19 January 2009 the following Interest Rates applied:
Official cash rate 5.00% (stable)
90 day bill rate 4.50% (down)
5 year swap rate 4.39% (down)
NZ/US Dollar 0.5390 (down slightly)

Current Range of Interest Rates for home and investment mortgages as at 19 January 2009

Floating:
6.99% to 10.25% (down)

Fixed For:
1 Year - 6.49% to 9.95% (down slightly)
2 Year - 6.84% to 9.70% (down slightly)
3 Year - 6.85% to 9.85% (down)
4 Year - 6.95% to 9.72% (down)
5 Year - 6.85% to 9.36% (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.