News - 4 December 2006

Problem Profile

Land Banks and Subdivisions outside of Auckland !

A client rang me last week with new project that he was looking at in a provincial town in the Waikato. Unlike Auckland, he was able to find 2 large sections beside one another, that offered easy subdivision and development potential. The price was also affordable!

However, some lenders are more wary of projects outside of Auckland, because of potential difficulties with resale. I obtained finance sufficient for the client to acquire and subdivide the properties, and structured the transaction to allow further development in the future.

Who do YOU know that is involved in development projects either for resale or for long term holds? Get them to CALL STUART NOW ON 021 676 747 so I CAN HELP THEM!!

Food for Thought

One person can make a difference and every person should try. - John F Kennedy

Interest Rate and Currency Comments

The Reserve Bank meets this week for the next 6 weekly announcement on the Official Cash Rate. Whilst commentators are not predicting a rise at this point, continued underlying strength in the economy, and particularly in the housing sector, means that there remains a real chance of an increase early next year. However, longer term interest rates should show some weakness in the next month or so, as US long term rates have dropped quite quickly

Unlike last newsletter where the kiwi had settled, it has since taken wings and flown!! (against the US dollar at least). This has little to do with increasing strength of the kiwi (it has been relatively stable against the currencies of our other major trading partners), but reflects a very weak US dollar. This has been caused by economic indicators pointing to a rapid slowdown in the US economy rather than the "soft landing" that was previously predicted. The trend will not become clear until the New Year at least.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 4 December 2006 the following Interest Rates applied:
Official cash rate 7.25% (stable)
90 day bill rate 7.62% (stable)
5 year bond rate 6.17% (stable)
NZ/US Dollar 0.6848 (down from 0.6645)

Current Range of Interest Rates for home and investment mortgages as at 4 December 2006.

Floating:
8.50 to 9.95% (stable)

Fixed For:
1 Year - 7.85% to 8.95% (stable)
2 Year - 7.85% to 9.25% (stable)
3 Year - 7.85% to 9.10% (up slightly)
4 Year - 7.80% to 8.34% (stable)
5 Year - 7.70% to 8.26% (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.