News - 30 April 2007

The Alpha Update

Second Mortgages

I often get inquiries about second mortgages from clients wondering how exactly they work and when they are a suitable option.

A second mortgage, quite simply, is a secured loan that is subordinated to another loan (the first mortgage) against the same property. If the loan goes into default, the first mortgagee gets paid from the proceeds of selling the property first, before the second mortgagee gets any money. As circumstances and lifestyles change, borrowers sometimes find themselves needing extra financing for renovations, or emergency medical treatment. Developers also find them useful if they have unexpected cost overruns or time delays on building projects. A second mortgage can provide a way to finance these unexpected or unplanned situations WITHOUT BREAKING ATTRACTIVE FIXED RATE FIRST MORTGAGES.

Because second mortgages are riskier for the lender, they charge a higher interest rate. But, the benefit of the finance may well outweigh this small cost

Call me now 021 676 747 or 0800 676 747 so we can discuss your specific needs and see if a second mortgage is right for you.

Food for Thought

I am a man of fixed and unbending principles, the first of which is to be flexible at all times. Everett Dirksen

What's New??

I have a new finance company alternative that has just been established. If you have major plant and equipment or vehicle financing requirements, give me a call.

Interest Rate and Currency Comments

As expected, the Reserve Bank raised the Official Cash Rate last week to 7.75%. Banks have been quick to pass this rise on, with Westpac first off the block with a floating mortgage rate of 10.05%. The others will most likely follow this week. Fixed rates have also risen in the past fortnight, although not nearly as much as in previous weeks. The hope is for a little stability for the next month or so....!

US dollar weakness continues to push the kiwi cross rate higher. However, the kiwi is more stable against the rest of our trading partners. Once there are signs of our interest rates falling, the currency will plummet across the board.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 30 April 2007 the following Interest Rates applied:
Official cash rate 7.7% (up)
90 day bill rate 8.07% (up)
5 year bond rate 6.80% (up)
NZ/US Dollar 0.7392 (up from 0.7350)

Current Range of Interest Rates for home and investment mortgages as at 30 April 2007.

Floating:
8.80 to 10.05% (up)

Fixed For:
1 Year - 8.0% to 9.60% (up)
2 Year - 8.20% to 9.75% (up)
3 Year - 8.05% to 9.75% (up slightly)
4 Year - 7.95% to 9.51% (up slightly)
5 Year - 7.90% to 9.17% (stable)

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.