News - 24 July 2006

Problem Profile

Second Mortgages have their place!

What do you do when you need $40,000 in a hurry, but the bank has said: "NO!" ? This was the problem faced by clients of mine, who had a good equity position, but insufficient cashflow to meet normal servicing criteria. They had 2 choices: Refinance entirely, using a self-declared income (or lo-doc) product, or take a small second mortgage and refinance the debt once their income situation changed.

The second mortgage was quick, easy, and meant that they preserved good fixed rates on existing debt. No proof of servicing capacity was required, because of the strong equity position. Fees and costs were added into the loan amount, with the whole deal being finalised within a week.

WHO DO YOU KNOW THAT HAS A SHORT TERM NEED FOR FINANCE - WHATEVER THE PURPOSE? THEN CALL STUART ON 021 676 747 NOW FOR A SOLUTION!!

Food for Thought

Money makes money and the money money makes makes money  - Benjamin Franklin

Interest Rate and Currency Comments

Interest rate rises sprang up suddenly last week, as economic data showed inflation remaining high and growth also higher than expected. The exchange rate drop has forced the cost of imports higher, whilst rising oil prices has doubled the effect through higher freight costs. No rise in the Official Cash Rate is forecast for the rest of this year, however a drop is not likely either until mid next year. This may not be the last rise in fixed rates this year.

The currency continues to oscillate around a downward trend, as interest rates in the US and our other trading partners climb. However, geopolitical issues such as the fighting in the Middle East can create distortions to the trend.

(See below for latest interest and exchange rates).

The Finance Markets

As of 8am on Monday 24 July 2006 the following Interest Rates applied:
Official cash rate 7.25% (stable)
90 day bill rate 7.51% (up slightly)
5 year bond rate 6.20% (up)
NZ/US Dollar 0.6225 (up from 0.6052)

Current Range of Interest Rates for home and investment mortgages as at 24 July 2006.

Floating:
8.60 to 9.95% (stable)

Fixed For:
1 Year - 7.85% to 8.90% (up)
2 Year - 7.75% to 8.95% (up)
3 Year - 7.65% to 8.95% (up)
4 Year - 7.80% to 8.39% (up)
5 Year - 7.70% to 8.31% (up)

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.