News - 12 December 2005

Interest Rate and Currency Comments

After almost daily changes in interest rates during the middle of November, things have been quiet in the last week, awaiting the Reserve Bank announcement on Thursday this week (8 December). Opinion is unanimous that rates will rise by a further 0.25% at least, with some picking a 0.5% rise to “shock the market into submission”.

However, whilst floating rates are still rising, fixed rates are steadying at current levels (8%-8.5%, depending on maturity). US interest rates appear to be steadying, which is good news for our longer term rates.

With interest rates as high as this, the kiwi dollar is in hot demand, driving our currency higher against all of our major trading partners. Until our interest rates start to fall, the currency will remain high and may go higher still….

Call me NOW to find out what you can do in this rising interest rate market!!!

Food for Thought

Every thought is a seed. If you plant Crab apples don't count on harvesting Golden Delicious

Problem Profile

Big Mortgages – over $1,000,000

Recently, I had a client who was looking to buy a house without having sold his first. As a result, the total borrowing required was well in excess of $1 million. Two aspects are critical when working on a transaction of this size… Structure and Interest Rate.

Structure was the most important aspect, because the client needed flexibility around the amount he borrowed, yet certainty that most of his borrowing was at a known interest rate.

Interest Rate was important because of the absolute size of the amount borrowed, although not as important as you might think, because all lenders are very negotiable for a transaction of this size.

The end result was a client who was very happy with both the home he bought and the financing package that he received.

WHO DO YOU KNOW who has a problem like this?????Get them to call Stuart Duncan at Alpha Financial Solutions Ltd on 0800 676 747 to find out more. We Can Help!

The Finance Markets

As of 8am on Monday 12 December 2005 the following Interest Rates applied:
Official cash rate 7.25% (up)
90 day bill rate 7.63% (down slightly)
5 year bond rate 6.17% (up from 6.14%)
NZ/US Dollar 0.7010 (down from 0.7055)

Current Range of Interest Rates for home and investment mortgages as at 5 December 2005.

Floating:
9.25% (stable)

Fixed For:
1 Year - 8.50% to 8.55% (stable)
2 Year - 8.25% to 8.30% (stable)
3 Year - 8.10% to 8.20% (down sligtly)
4 Year - 8.10% to 8.15% (stable)
5 Year - 7.95% to 8.00% (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.