News - 4 August 2008

The Alpha Update

Valuations

Tightening of credit policies by all lenders over the last 8 months has seen the need for valuations increased dramatically. Almost all residential transactions over 90% LVR need a valuation now and sometimes lenders are calling for them under this figure. Commercial valuations always needed to be comprehensive, but now even moreso. Residential valuations need to be more complete and the valuer questioned if aspects are unclear. If a valuation is required for either a residential or commercial property, the valuation must be less than 3 months old.

What does this mean for you? Leave it as late as you can before ordering a valuation on a property (do the rest of your due diligence first). Use a reputable valuer rather than the cheapest one around, because the lender may not accept the first valuation at all and you end up paying twice. Be cautious about expecting to get a valuation readdressed from one party to another (eg: vendor to purchaser), as the valuer may not be prepared to do this.

Bottom line - consult with your broker first to ensure the most effective way of meeting the current valuation requirements of lenders

Who do you know that needs commercial property finance, high loan to value residential finance or is buying by private sale?? Get them to call us Today on 021 676 747 or 0800 676 747 to understand their valuation requirements and options. WE CAN HELP!

Food for Thought

When dealing with backstabbers, remember that they are only powerful when you have your back turned - Eminem

What's New??

• Flexible Bridging Finance Loans available
• 70% No-Doc and 80% Lo-Doc loans still available
• 2008 Property Services Book now available - a "yellow pages" specifically for all things property

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

The Reserve Bank surprised everyone and dropped the OCR, and signaled further drops in the coming months. Interestingly, no one has dropped their floating rates yet! But falls of up to 0.25% have occurred in fixed rates between 12 and 36 months. This is despite the cost of funds for these periods being very high, meaning that lenders are sacrificing interest margin to again compete against one another. A fall in floating rates will happen eventually, but further fixed rate falls are dependent on falls in the international cost of money.

With a clear signal that our interest rates are coming down, the kiwi has lost ground against all our major trading partners (down 4 cents against the US dollar and 6 cents against the Aussie in the past 3 months. Whilst there will be fluctuations along the way, the downward trend will continue for some time yet.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 4 August 2008 the following Interest Rates applied:
Official cash rate 8.00% (down)
90 day bill rate 8.33% (down)
5 year swap rate 7.22% (down)
NZ/US Dollar 0.7340 (down)

Current Range of Interest Rates for home and investment mortgages as at 4 August 2008

Floating:
10.20 to 11.50% (stable)

Fixed For:
1 Year - 9.09% to 10.85% (down)
2 Year - 8.85% to 10.65% (down)
3 Year - 8.89% to 10.85% (down)
4 Year - 8.95% to 10.35% (stable)
5 Year - 8.95% to 10.35% (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.