News - 20 February 2006

Interest Rate and Currency Comments

Interest rates continue to fall, with most 3-5 year rates below 8% now and shorter term rates trending towards 8%. This is in contradiction to the US, where rates have been gradually rising over the past few weeks. There is also severe non-interest rate competition amongst the banks, as total loan volumes slow. This interest rate reduction means that borrowers coming off a previous 2 or 3 year fixed rate won't be faced with such a major jump in their monthly payments.

Call me NOW to find out what negotiation we can achieve on your loan or interest rate rollover!!!

As interest rates in NZ fell and those in the US rose, the kiwi took a battering last week. Further rises in US rates are probable, as their economy continues to gain in strength. Volatility around a downward trend will remain for some time to come.

(See below for latest interest and exchange rates).

Food for Thought

For sincere advice, and the correct time, call any number at random at 3am! (Steve Martin)

Problem Profile

Self declared income for wage and salary earners

Lo-doc or self declared income loans for self employed borrowers have become a mainstream product over the past few years, with 3 major banks and numerous other lenders offering some form of this product. However, until recently, wage and salary earners have not been able to access such a product. This has disadvantaged them where, for instance, they have a pension or income from a family trust, or from boarders that the bank wouldn't recognise.

A major bank has just launched a new self-declared income product that is available to all types of borrowers, regardless of where their income is derived from. Whilst borrowers have to declare an income sufficient to service the proposed loan, the bank does not require evidence of the income declared!! Investors whose portfolios are substantial may also benefit from such a product because lenders typically deduct 10-25% off the gross income figure when assessing debt servicing ratios. Whilst not appropriate in every situation, this product provides a very useful supplement for some people.

Who do you know that has great cashflow that comes from an unprovable source, or one that a bank wont take into account?? Get them to give Stuart a call now on 524 6062 to discuss their situation!!!

The Finance Markets

As of 8am on Monday 27February 2006 the following Interest Rates applied:
Official cash rate 7.25% (stable)
90 day bill rate 7.50% (down slightly)
5 year bond rate 5.81% (up from 5.71%)
NZ/US Dollar 0.6616 (down from 0.6704)

Current Range of Interest Rates for home and investment mortgages as at 20 February 2006.

Floating:
8.50 to 9.75% (stable)

Fixed For:
1 Year - 7.60% to 9.05% (down slightly)
2 Year - 7.75% to 9.25% (stable)
3 Year - 7.50% to 9.15% (down slightly)
4 Year - 7.85% to 8.05% (down slightly)
5 Year - 7.45% to 8.45% (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.