News - 6 October 2008

The Alpha Update

The Pace Of Change Increases

Since the last newsletter, we have seen a significant meltdown in the world's financial markets. The impact on NZ borrowers can be summarised as follows:

• Much more risk-rated pricing (ie: the higher the perceived risk, the higher the price and tougher the conditions)
• Withdrawal of loan products (eg: lo-doc loans from ASB Group, Fixed Rate loans from GE Money and non-bank lenders)
• Higher thresholds for debt servicing from all lenders (reflecting rises in petrol, food, and living costs over recent months)
• Greater deposits required by borrowers
• Extreme reluctance by lenders to take over someone else's problem (meaning fewer options available for borrowers with a less than perfect credit or loan payment history)
• Little, if any, negotiation on interest rates, fees etc for all but the best quality loan applications

Now, more than ever, you need an independent professional mortgage broker to research your options and advise you on the best options available to you in the current climate.

Who do you know that needs finance or is struggling to obtain the finance that the need? Get them to Call Us Today on 021 676 747 or 0800 676 747 for a Free Review of their finance options. WE CAN HELP!

Food for Thought

The only thing we have to fear is fear itself - FD Roosevelt

What's New??

• Further falls in interest rates
• Pockets of private finance still available

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 market expects the Reserve Bank to again drop the Official Cash Rate by 0.5% on October 23rd, due to the substantial increase in the international cost of credit. This may not provide any immediate change to retail interest rates, as lenders offshore funding costs have risen sharply in the past 2 months. However, as the international credit markets free up (now the US bailout has been approved), things should slowly improve. Floating rates will be the only option for many, after the withdrawal of fixed rate products from GE Money last week.

The kiwi and aussie have left on the sideline as major currencies fluctuate wildly due to credit market uncertainties. The kiwi has ended slightly stronger against the US dollar and much stronger against the aussie dollar amidst concerns around the demand for natural resources in the coming months. The longer term picture is for a downward kiwi as there is less demand for our exports internationally.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 6 October 2008 the following Interest Rates applied:
Official cash rate 7.50% (stable)
90 day bill rate 8.04% (up)
5 year swap rate 6.86% (up slightly)
NZ/US Dollar 0.6720 (up)

Current Range of Interest Rates for home and investment mortgages as at 6 October 2008

Floating:
9.70 to 10.95% (stable)

Fixed For:
1 Year - 8.49% to 10.85% (down slightly)
2 Year - 7.99% to 10.65% (down slightly)
3 Year - 8.39% to 10.55% (stable)
4 Year - 8.70% to 10.35% (stable)
5 Year - 8.80% 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.