For the latest news, stats and views in mortgages contact your bank or mortgage broker, or talk to Stewart Mitchell from Kiwi Mortgage Market.
Considering Buying an Apartment?
If you like apartments whether it be to live in or as an investment, now is a very good time to consider your options.
Take a look at the below:
The good news comes two-fold:
1. None Managed - up to 95% funding now available
There are deviations from this based upon whether its an investment property, foreign income etc but there is the ability to achieve up to 95% and each judged on its individual merit.
2. Managed Apartments - up to 80% LVR
Same conditions above apply.
Apartments have been difficult for alot of the general public to invest in over recent years due to the high LVR (Loan to Value) ratios required, especially managed apartments so this newsletter opens the doors for alot of our clients.
Very strong clients that tick all the boxes and live in NZ - can now get up to 70% LVR*
Foreign Investors - Australians - can now get up to 60% LVR*
Foreign Investors - from anywhere else - generally still up to 50% LVR*
* Another factor will be the actual apartment complex itself, its history and performance of the management team.
This is a case by case basis but opens up a lot of possibilities for investors.
And for residential investors...
We are now able to offer LVR up to 90% for any Kiwi's or Australians earning Australian dollars and looking to invest in a standard residential property in New Zealand. As always, conditions apply.
Crystal Ball gazing
Kiwis have always been traditional fixers of their mortgages and rightly so but over the last few years have switched to majority floating......and rightly so!
There are various sentiments out there predicting what is going to happen in the near and mid-term.
It is a real possibilty that by Dec 2013 to 1st quarter 2014 that interest rates will be at 7.00%. If you consider that the Official Cash Rate is currently 2.5% and predicting 1.5% OCR increase over the time scale above. This is excluding any potential bank increases over that period too.
How Much Lower
For some, the plan is to wait till the interest rate hits rock bottom and then look to fix. If the interest rates does come down more, which it could but in reality only very slightly, it will be tempered by:
Everyone's position is different so we all need to factor different thoughts into the process, but its certainly worth considering mitigating some of your risk and fixing some, so that should fixed rates increase before you have chance to react, you have mitigated some of your risk instead of floating your whole mortgage in the hope of getting a better rate than the 50 year low.
Todays Best Interest Rates
Below are the best interest rates Kiwi Mortgage Market can negotiate on your behalf:
Floating - 5.24%
12 months - 4.85%
24 months - 5.09%
36 months - 5.50%
48 months - 5.85%
The interest rate may come down another 0.25% (tops) before starting its mammoth climb, ultimately back up to the heights of 10% which is what I was paying 8 years ago.
If you weigh up how much more it's going to come down against the potential for increases and where it will go when it starts to climb, considering fixing at least some of your mortgage may not be a bad idea.
Sustainability, the word of the moment and one that all of us investors focus on when equity increase has almost become a swear word of late!
Now is a very good time to review your mortgage(s) as banks are competing for business making interest rates very competitive along with cash incentives as high as $ 2,000
Your property is obviously an investment and it makes sense to review any associated debt along with assessing where the interest rates could be over the coming 24 months.
To give you an idea of the types of rates we can secure for you (These vary depending on your LVR (Loan to Value Ratio):
· Floating – as little as 5.29%
· 12 month fixed – 5.29%
· 2 years – 5.49%
· 3 years – 5.70%
· 4 years – 6.00%
The interest rates could be approaching 7.00% to 7.50% by December 2013 as Official Cash Rate is currently 2.5% and expected to be 4.00% within 2 years. It’s all crystal ball gazing stuff but with interest rates at all time lows and fixed rates slightly creeping up, it certainly needs considering.
The bottom line is that we can assist in improving your Yield ROI and also potentially provide other benefits.
If you have an existing rental property or are looking to further invest anywhere in New Zealand, contact us and you will not only be catered for beyond expectation but save money.
One final thought, we do not charge you for our service, we are paid directly by the banks, provide an unbiased view and can shop your position to the best partnering bank for your personal interests only.
Feel free to contact us for further information.
It now appears to be not a case of if you will fix but when. OCR has remained the same again at 2.5% and could well see the year out as it is.
However, Banks in Australia have taken matters into their own hands and increased lending rates even though OCR stayed the same which is something that may happen here later in the year due to banks paying higher rates to borrow money from abroad.
Crystal Ball Gazing
I am using that awful word 'sentiment' more and more lately but that is simply what it is with a variety of 'sentiments' in the air too. So what does the future hold over the next 18 months with interest rates?
If banks do increase their rates due to higher borrowing from abroad the current sentiment is that borrowing will increase by 0.30% sometime this year, not devastating but there.
OCR is thought to be at around 4.00% by late 2013.This means interest rates could be 1.80% higher than where they are today by late 2013.
Based on todays best rates this would equate to 7.30% by late 2013, more like closer to 8.00% for most of you depending on how well your deal was negotiated.
We always have to be very careful regarding advice as everyone circumstance is different and we do not know the future but if tell you what the best rates we can get are at the moment and that if they do come down it won't be by much, smart money would suggest at least mitigating some of your risk if not all.
KMM Best Rates
Floating - 5.49%
2 Years - 5.49%
3 Years - 5.80%
4 Years - 6.00%
That is the current question and it varies depending upon each individual's circumstance. One thing is for sure if you can get a record low of 5.49% fixed for up to 2 years then it can't be a bad thing and maybe worth considering mitigating at least some risk.
You can also get fixed for 3 years under 6.00%. A percentate split is at least worth considering.
Loan to Value Ratios
Today the banks are very keen to lend and will go up to 95% LVR. Gifted deposits can even be accepted for those with a partial deposit which helps assist those out there that have the income but not a large enough deposit.
Risk Appetites and Moods
The A-typical client that comes through our doors have been turned away by the bank that they have banked with for years. Unbeknown to the potential lender is that their personal bank does not have a policy that suits their position or their relevant risk appetite. Even if your bank is prepared to lend you the money, its not necessarily going to be the best deal in the market place at that point in time, thats what we are here for.
I was a foreign Investor to Queenstown for 8 years so fully understand the potential pit falls, uncertainties and the emotional experience of investing from as far away as the other side of the world, so not only can I provide sound advice but talk from the heart. We are securing some very good lending at the moment for our foreign investors, up to 80% LVR in some instances.
Investing in a Business or Leverage from your Business for Property
I have done both personally along with selling my business so can provide great, experienced advice when looking at purchasing/selling your business or looking to buy property with your business accounts.
The views represented here are those of Stewart Mitchell from Kiwi Mortgage Market. hoamz Ltd will not accept any responsibility in respect of any errors, inaccuracies or misstatements contained herein, should any details prove to be incomplete or incorrect.