News - 2 February 2009

The Alpha Update

Action Aplenty!

The Reserve Bank surprised most by dropping the OCR by 1.5% last Thursday. The reason is because of the woeful state of the global economy, with global growth expected to be only 0.5%, down from 3.4% last year. This is the lowest global growth rate since the early 1940's, with all our major trading partners except Australia projecting economic contraction.

On the back of the OCR reduction, banks have been quick to reduce their housing interest rates, although not uniformly. SBS Bank has the lowest floating rate, BNZ the lowest 6 month rate, Kiwibank the lowest 1 yr rate and TSB the lowest 2 yr rate. ASB has the best 5 yr rate at 5.95%, a rate that is the same from 6 mths to 5 yrs fixed.

While there is some suggestion that interest rates will go lower still, clearly we are getting close to the bottom of this unbelievable plunge (4% reduction in 3 months!!). Across the board, these are the lowest rates that the country has seen since the 1960's! Borrowers should start to lock in loans coming off fixed rates at these low rates for long terms from now on - anything under 6% has got to be fantastic given that only 6 months ago we were talking 9% plus!

Who do you know who needs an experienced mortgage broker to advise them on their interest rate options? Get them to Call Us Today on 021 676 747 or 0800 676 747 for an assessment of their situation and an action plan.

Food for Thought

Education is a progressive discovery of our own ignorance!

What's New??

• Growing differences between interest rates and loan criteria amongst lenders
• Continued tightening of credit policies across lenders

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

See comments above. Those with a job and some equity have a great opportunity at present. The scenario in NZ is much more positive than many areas of the globe. Commentators are picking the OCR ending at 2% - 2.5% inside the next 3 months. However, a rebound could happen quite quickly.

As our interest rate advantage shrinks and global investors continue their conservative stance, the kiwi will continue to slide. However, the aussie is also sliding, so the cross rate has not dropped as dramatically. Further weakness will continue for some time to come, but with short upward bounces long the way

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 2 February 2009 the following Interest Rates applied:
Official cash rate 3.50% (down substantially)
90 day bill rate 3.67% (down)
5 year swap rate 3.88% (down)
NZ/US Dollar 0.5085 (down)

Current Range of Interest Rates for home and investment mortgages as at 2 February 2009

Floating:
6.45% to 9.89% (down)

Fixed For:
1 Year - 5.69% to 9.90% (down)
2 Year - 5.88% to 9.32% (down)
3 Year - 5.95% to 9.47% (down)
4 Year - 5.95% to 9.72% (down)
5 Year - 5.95% 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.