Balanced forecast, steady market.

As we head into winter, the market and the economy remain surprisingly stable. Once again, it’s a case of being balanced between conflicting forces, rather than being steady because nothing’s happening. This is still a good time to borrow and there’s plenty of wiggle room in those carded rates, so give me a call if you’re buying, moving or renovating.

Two of many recent case stories:

In late April a client came to us having already negotiated with the bank – he’d been offered 4.49% for one year fixed. Even though he’d signed the paperwork, we were able to sort out a small break fee ($119) and get him a rate of 4.15% with the same bank, which saved him $1,392 a year in interest payments.

We have recently been able to source rates such as 4.15% for 1 year fixed and 4.25% for 2 years fixed (note, this is the lowest we are currently seeing and is not available at every major bank). As Kiwis, we have traditionally had a set and forget type attitude to our mortgages, however, we are now waking up and realising that there are literally thousands of our hard earned dollars on the line here. Better this money is in your back pocket than in the banks’ profits. So, having your mortgage actively managed by a Mortgage Adviser is a no brainer, it’s free and you don’t have to spend anytime researching best rates as we know exactly how low each of the banks will actually go. So, if you have a friend with a mortgage, send this email to them and cc’ me in, I will be more than happy to give them free advice and recommendations on their mortgage, which could save them thousands.

Mark & Katherine*(name changed for privacy) recently called – they were so excited as they’re expecting their first baby. In preparation, they asked if they could go interest only on their mortgage for 12 months for some cashflow relief with maternity leave. As they were at 71% LVR at their current bank, their policy was only at 70% and under you can have interest only. No exceptions were given as ‘the computer said no’. Mark & Kathrine now started to worry however we contacted another bank who took them on as clients with open arms, not only giving them interest only for 12 months, but also offer better rates and a $6k cash sweetener, which they used to repaint the baby room, buy a cot and a rather flash pram with big wheels.

Are the good school zones worth the money?

• Is the school really superior? Is it going to be better than other public schools? You may find a “bargain” school like Western Springs College where house prices are more affordable than in double grammar zone.
• How much will private schooling cost? If you have three or four children, private schooling could be more expensive than servicing the additional debt of moving to a great school zone. For one child, it might be better to live in a cheaper zone and pay for a private school if you think that’s the way to go.
• Will the house still be in zone when you come to sell it? Popular school zones are being reduced as higher-density housing increases pupil numbers. And it’s worth bearing in mind that the government could do away with the zoning system at any time, so your premium may not be able to be recouped when you sell.
• Is the school right for your child? Even the best schools aren’t always a match with every kid. Think about what will suit your son or daughter.

Yields up, prices flat.

This is all part of the housing cycle and the balance between supply and demand. There’s a short supply of rentals at present, and no apparent shortage of demand, so it looks as though yields will keep going up unless prices suddenly jump. The lesson here? Take a long-term view if you’re considering either entering or exiting the investment property market – make sure your decisions fit with your future financial goals.

Where there’s a Will..

Contact Joel