News - 26 September 2005

Interest Rate and Currency Comments

The joint shocks of Hurricane Katrina and then Rita have caused much comment about the flow on effects. Oil prices will now steady but increases to date have yet to be passed on. The election has been a non-event to this point.

The local economy will continue to slow, it is just the pace that is in question. Whilst the Reserve Bank has held interest rates yet again, it has very little room to move. Another increase is looking more likely before the end of the year - in my opinion it's a 50:50 bet.

Call me now if you have a fixed rate maturing before Christmas!

The kiwi is only being held up by interest rates. Our current account deficit at 8% of GDP means the kiwi is significantly overvalued and will fall as interest rates rise in the rest of the world.

(See below for latest interest and exchange rates).

Food for Thought

Challenges are gifts that force us to search for a new centre of gravity. Don't fight them. Just find a different way to stand.

Problem Profile

Why Use a Mortgage Broker?

Mortgage brokers provide a service that adheres to the "KISS" Principle.

K= Knowledge    Your Broker should have a wide knowledge of lenders, their interest rates, their lending criteria, and the finance market in general. They are Finance Professionals.

I = Independence    Your Broker is acting on behalf of you the client, not the lending institution. They will find the most appropriate lender and finance package for your unique circumstances.

S= Structure   Your Broker will be able to recommend a finance structure that takes into account your current and anticipated future circumstances. They are able to recommend structures that are cost and tax effective.

S=Simplicity  Your Broker will take all of the hassle out of finding and arranging finance. They should guide you through completion of any application forms, assist with the arrangement of valuations, building inspection reports, etc, liasse with real estate agents, solicitors, and lenders to ensure all conditions are met, and ultimately ensure settlement of the loan in a timely and professional manner.

If you are using a broker that does not meet this standard, call Stuart Duncan at Alpha Financial Solutions Ltd and Acumen Mortgages on 0800 676 747 NOW!

The Finance Markets

As of 8am on Monday 26 September 2005 the following Interest Rates applied:
Official cash rate 6.75% (stable)
90 day bill rate 7.11% (up)
5 year bond rate 5.75% (up from 5.70%)
NZ/US Dollar 0.6932 (down from 0.7053)

Current Range of Interest Rates for home and investment mortgages as at 26 September 2005.

Floating:
7.85% to 9.50% (stable)

Fixed For:
1 Year - 7.60% to 8.40% (stable)
2 Year - 7.50% to 8.25% (up slightly)
3 Year - 7.45% to 8.55% (up slightly)
4 Year - 7.25% to 7.84% (down)
5 Year - 7.15% to 8.00% (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.