In the meantime though, we’re seeing banks competing for market share by continuing to discount their home loan rates with negotiation. First home buyers have been out in force, borrowing a record high of over $900 million last month. It’s been wonderful to see so many New Zealanders get into their first house and we’ve had plenty through the doors here at SuperCity. Renovation lending continues apace, and we’ve also seen a lot of people upgrading and downsizing to get into the home that’s right for them. While investors aren’t as active as they were in 2016, this is a busy buying period and there’s been a definite uptick in investor borrowing.
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?
School zones have become a major driver of property prices in Auckland. There can be a significant gap between in-zone and out-of-zone houses, even when they’re right next door to each other. The in-zone premium can be huge, with Epsom Girls’ Grammar adding a whopping 90.5% to the price of a local house, Glendowie College adding 64.43% and Takapuna Grammar adding 61.29%.
Is it worth it? There are many factors to weigh up when you consider spending hundreds of thousands more to get into a certain school zone:
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.
There’s a lot to think about before you decide which house is right for you.
Yields up, prices flat.
There’s been a turning point in the market for property investors, with rental yields increasing in more places than they’re dropping. Prices have stayed flat or dipped at the lower end of the market, pushing yields slightly higher as rents have inched upwards. In general, yields are still very low: Flaxmere in Hastings was the highest at 9.6% but nothing in Auckland (or Tauranga) managed to hit 5%.
However, this is still an indicator of things to come. For several years, policies have been aimed at discouraging property investment and getting more first home buyers into the market. Those policies have been working. Investors who have decided to exit the market have sold their properties, often to first home buyers. The upshot is that this year we have seen significant rental shortages leading to record rents in the provinces. Rents in Auckland and Wellington are rising faster than wages. I think we’ll see more of this as the housing shortage continues to bite. That will, in turn, drive up rents, making yields look more appealing and encouraging investors back into the market.
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..
It’s easy to make excuses for not having a Will or Power of Attorney: ‘I don’t have anything of value’; ‘It’s too hard’; ‘I’ll get around to it eventually’. However, one hour of your time could save a year of stress for your loved ones if you die, or even longer if you become seriously unwell.
What happens to the kids?
This is a big question for parents. You may have considered the possibility of being a single parent, but you and your spouse could both die simultaneously. If you don’t have your intentions set out clearly in a Will, it causes complications and masses of stress. Your assets could be frozen while your estate goes through probate.
Surely my next of kin just gets it all?
Unless you own no assets, your will is an essential tool to prevent your loved ones from battling through a morass of paperwork and stress. Your assets will not automatically go to your partner or the person you think it should – the government does its own calculations to divide up your assets. And if you have no relatives, your estate will go to the State.Had a life-changing event recently?
When you marry, your old Will is no longer valid. And a divorce means any provisions in your Will benefitting your ex may no longer be your wish. You also need to consider your Will after other major changes, like having a child, entering a new relationship or ending a relationship.What if you can’t make decisions for yourself?
Creating an Enduring Power of Attorney lets someone you trust make medical and or financial choices for you if you’re too unwell or otherwise unable to make those decisions. For example, if you suffer a serious head injury, disease or mental illness.We highly recommend getting onto this if you want to protect your spouse, your kids and have that peace of mind. If you don’t have a solicitor, let us know and we’ll help connect you with one.Blessings to you all,Jaime James
021 527 069 email@example.com