News - 21 NOVEMBER 2005

Interest Rate and Currency Comments

Interest rates have continued to rise substantially over the past fortnight as lenders pass on rises in wholesale rates. The market has fully priced in a 0.25% rise in the floating rate in December, and added a high percentage chance of a further 0.25% in January 2006. Fixed term rates have also risen across the board, with most rates now above 8% (although some lenders are negotiable, depending on the term).

The prognosis going forward is for rates to stay up for some time, with the potential for longer term rates to remain high and shorter term rates to fall. However these changes may take many months to play out, so in the short term, get used to the rates you see at the moment!

High domestic interest rates are keeping the currency up, a situation that is likely to continue into the new year.

Call me NOW to find out what you can do in this rising interest rate market!!!

Food for Thought

Creativity comes from a conflict of ideas

Problem Profile

Loans for non-residents

In recent weeks, I have done a number of loans for non-residents looking to buy property in NZ, either for owner occupation or investment. The borrowing rules for non-residents depend very much on the individual situation, but can be broadly summarised into 3 groups:

• Kiwi passport holders who reside offshore – These borrowers are largely treated as though they live in NZ, provided they have someone here who can act on their behalf (power of attorney)
• Australian residents – These borrowers are also treated as though they are NZ residents, although account opening forms tend to be slightly more complex
• Other nationalities – These borrowers are assessed on a case by case basis, with lending margins of maximum 90% (and 80% for many banks), and the need to have a strong income and good surplus in the land of their residency.

Each case is treated very much on its own merits, so it is important to get input from an independent finance professional up front. Preapproved finance makes transactions flow a lot more smoothly!

WHO DO YOU KNOW who is looking to buy NZ property and is not an NZ resident?????Get them to call Stuart Duncan at Alpha Financial Solutions Ltd on 0800 676 747 to find out more. We Can Help!

The Finance Markets

As of 8am on Monday 21 November 2005 the following Interest Rates applied:
Official cash rate 7.00% (stable)
90 day bill rate 7.68% (up slightly)
5 year bond rate 6.14% (up from 6.07%)
NZ/US Dollar 0.7055 (up from 0.6950))

Current Range of Interest Rates for home and investment mortgages as at 28 November 2005.

Floating:
9.25% (stable)

Fixed For:
1 Year - 8.50% to 8.55% (up)
2 Year - 8.25% to 8.30% (stable)
3 Year - 8.20% to 8.20% (stable)
4 Year - 8.10% to 8.15% (up slightly))
5 Year - 7.95% to 8.00% (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.