Tony’s thoughts for June 2017
It was a pleasure to attend the recent CPIA forum at The Atrium in Hagley Park. I found the session on finance to be excellent, with great interaction and questions from the audience.
The most recent OCR announcement again showed no change at 1.75%, indications remain that it will stay flat until 2020. NZ swap rates have fallen again. The 10 year swap from a high of 3.61% in March to 3.24% in May, suggesting interest rates out of America in particular will have little effect on NZ. More importantly, the 1 year swap rate for NZ borrowing has fallen from 2.53% in December to 2.24% in May, suggesting interest rates will not be increasing any time soon. However, lenders are slowly tweaking their long-term interest rates upward, which is a reflection of lending being down and falling, i.e. volume is down, margin up. It is appreciated that bank term deposits are gradually increasing and so it’s very hard to predict the changes for the second half of 2017 – in theory, very little.
For our property investor friends at CPIA, the LVR restrictions on investment properties remain the biggest hurdle and banks are no longer rolling over interest only periods after they have ended. This is where like for like refinancing is beneficial as it is based on the dollar part of the lending, not the structure of the loan, so new 5 year interest only periods can commence.
Overall, the lending environment is quite difficult in NZ. New finance companies and peer to peer lenders are popping up. Funding through the second tier market is a definite consideration for investors. Here at Tony Mounce Mortgages, we have access to a wide range of non-bank funders available to us so we can arrange lending to suit you and your circumstances.