News - 30 March 2009

The Alpha Update

Off Like A Rocket !!

Our prophesies came true last week, with fixed interest rates soaring and some lenders making 3 rate increases in a week! 5 year fixed rates have jumped 1% in a week... from 6.5% last Friday week to 7.5% this last Friday. Other term rates from 2-4 years have also leapt.

Why?? Unfortunately, the international credit markets are still very sick. When businesses and private borrowers all started wanting to lock in 4 and 5 year rates at the same time, the banks had to borrow much of that money from offshore. Demand was huge, but supply was weak, and so the price went up - enormously! Until the demand weakens again, fixed rates will continue to go up.

What To Do Now? It depends on how long you want certainty for. The longer term fixed rates are still lower than their 5 year averages. shorter term rates (2 and 3 years) are still in the mid 6% area and are very attractive by historic standards. The big unknown is what interest rates will be in 2 or 3 year time when the current fixed rate expires. It's possible, with all the economic stimulus that has been pumped into the world, that interest rates could be substantially higher than they are now. But who knows - we have been in uncharted waters for the last 9 months and the future doesn't look any clearer at this time!

Call me TODAY on 021 676 747 to get expert advice on you interest rate situation. For loans due to expire in the next 2 months, we can also lock in current interest rates ahead of time.

So Call Us TODAY on 021 676747 or 0800 676 747 to Lock In Your Interest Rate NOW!

Food for Thought

Pope John XXIII said, "See everything; overlook a great deal; correct a little."

What's New??

• Finance Company Commercial Loans under 10%
• An exciting new concept in Property Management - more next time.

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

Comments above largely cover what has happened in the last 2 weeks. Businesses and investors have decided the bottom has been reached and have tried to lock in for as long as possible, all at the same time. Supply of longer term money is still quite restricted with offshore lenders wanting a premium (ANZ paid around 7.6% for 3 year money last week when their 3 year housing rate is 6.15%!) So interest rates have jumped very quickly. The expert prognosis going forward is that interest rates will continue to climb, although the speed and timing is uncertain. I'd suggest a bit of a roller coaster effect over the next 3-6 months.

The kiwi has jumped considerably against our major trading partners over the last fortnight, as global confidence starts returning (albeit tentative). Equally, our banking system (along with Australia) is seen as one of the safest in the world today, so we are well positioned when an eventual upturn begins. Further strengthening will occur, but again the path will be volatile

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 30 March 2009 the following Interest Rates applied:
Official cash rate 3.00% (stable)
90 day bill rate 3.39% (up slightly)
5 year swap rate 4.99% (up significantly)
NZ/US Dollar 0.5684 (up)

Current Range of Interest Rates for home and investment mortgages as at 30 March 2009

Floating:
5.99% to 9.49% (stable)

Fixed For:
1 Year - 5.65% to 6.79% (down slightly)
2 Year - 5.89% to 6.99% (up slightly)
3 Year - 5.99% to 6.99% (up)
4 Year - 6.50% to 7.45% (up substantially)
5 Year - 6.60% to 7.60% (up substantially)

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.