If I Were a Borrower What Would I Do?

I would fix three years.

Banks have just engaged in a round of fixed interest rate cuts which when combined with evidence of wholesale interest rates moving back up lead me to the view that it has become optimal to switch from floating to fixed.

At a minimum I would fix two years as that would cost me only 5.79% compared with floating at 5.74%. The 0.05% gap is miniscule and is the lowest since May 2009. Three months ago this gap was 0.86%.

The gap between floating and fixing for three years has declined to only 0.41% from 1.4% three months ago and is now the lowest since March 2009.

Personally I would take the three year rate because I like certainty and the 0.41% cost is very small. Most people however seem to be very comfortable sitting floating so if they change will probably only jump to the two year rate.

The chances are however that with little discussion in the media regarding interest rate rises and picking low points, very few people will in fact shift away from floating.

This will likely happen even though it is a complete gimmee because the chances of either the two year rate or floating rates falling again this year are low (though not zero given Europe uncertainty)

Thanks to Tony Alexander for his Weekly Comment 16/02/12

Looking out for your Interest

ANZ and National Bank have cut their one, three, four and five year fixed rate home loans by between 5 and 35 points. Both banks have identical rates now.
TSB has cut its one-year rate from 5.70% to 5.49%. This makes it the best bank rate on offer, but not the best overall.  

Click here for all rate changes

Goodreturns 14/02/12

Wellington Property Trends

Nationwide values continue to increase

Nationwide residential property values continued to gradually increase according to the latest QV monthly index. Values have risen 1.1% over the past three months and are now 2.7% above the same time last year, and 3.3% below the previous market peak of late 2007.

“While national values are continuing to increase, this is not universal across the country. While the combined main urban areas and combined rural areas have increased over the past few months, the combined provincial areas have begun to slide back again” said QV.co.nz Research Director, Jonno Ingerson.

Ingerson said “there appears to be a little more market activity since the New Year, with signs that decisions made over the holiday break are now being put into action. However potential buyers remain cautious and calculated and are often unwilling to commit quickly”.

“The increase in values in many areas, particularly central Auckland, can in part be attributed to a lack of supply, with a shortage of desirable and well presented properties for sale. When quality properties come up for sale in these areas they are in high demand which is tending to push the price up” said Ingerson.

Wellington

Over the past year, values in the Wellington area first fell a few percent, then recovered most of those losses since mid 2011, leaving current values just 0.4% below the same time last year and 6.2% below the 2007 market peak.

“Despite increased market activity, prices are generally quite static throughout Wellington. Properties in the lower price brackets are meeting the greatest demand although it is still important for all sellers to present their properties well and to price them sensibly” said QV Valuer Kerry Buckeridge.

14/02/12 QV

Latest NEWS!

Here are the latest real estate headlines

For February 2012

Smaller Wellington cities could 'wither away'

Khandallah Post Shop robbery footage released

Wadestown Residents Association born from dog smells

All Wellington bus routes to change

Sightings of missing Karori woman lead nowhere

Filth, waste, stench in hoarders' dwellings

Karori Tunnel to be quake-proofed

Plush apartment and retail building begins

111 objections to liquor store opposite school

One Love return could mean end of Hataitai hiatus

Fed-up landlord evicts capital's noisiest tenants

Vege patch sprouts in Civic Square

Miramar vet wants smarter dog control policies: five suggestions

The lovely, lovely Gypsy kitchen

Big banks' 90% plus home loans up NZ$2.9 bln in a year with ASB's more than doubling to NZ$3.4 bln

House listings, sales up in Wellington in January

Star system to rate quake safety of buildings

Looking out for your Interest

BNZ has this morning announced its cuts to fixed term home loans. Cuts have been made to one-year, 3, 4, 5 and 7 year rates and range from 10 points at the short end to 35 points for longer term loans. It has also removed its Classic one-year and 30-month rates and added a Classic two-year rate of 5.79%.
SBS and its subsidiary HBS have trimmed their two and three year home loan rates by 10 and 20 points respectively.

GoodReturns 10/02/12

Click here for all rate changes

If I Were a Borrower What Would I Do?

I remain happy floating but would be keeping an eye out for discounted fixed rates. Banks are finding credit demand to be far weaker than anticipated and there is always the risk that some will decide meeting old lending growth targets remains optimal and they will adjust interest rates to try and achieve them – like retailers discounting stock. So I could easily be enticed away from floating.

The rule I ran with last year was that I would fix two years if given a rate of 6%, or fix three years if given 6.25%. Both rates are available in the marketplace now (and so a big raspberry to those who last year said it was silly putting in such a statement as there was no chance of seeing such rates again).

But would I take one of these rates? Not necessarily because I think I can do better and would look to snap up a bargain out to four or five years taking the view that the world will not implode.

So I shall sit floating waiting for a bit more of a rate discounting war while keeping a very close eye on news from offshore just in case the planets line up for the better all of a sudden.

Thanks to Tony Alexander of the BNZ for his Weekly Comment 09/02/12

Latest Confidence Survey From BNZ

Housing Market Strengthens

Our first BNZ – REINZ Residential Market Survey for 2012 has found a reasonably sharp turn for the better in New Zealand housing market activity.

Each of our eight major measures of housing market strength has risen over the past month to show a residential real estate market attracting more interest from investors, even more first home buyers appearing, buyers becoming more motivated than sellers, and prices more strongly perceived to be rising.

The results gel with media commentary last week regarding accommodation seekers having greater and greater difficulty finding what they want of significant note is a sharp rise in licensed real estate agent perceptions of the number of people going through Open Homes, and price perceptions hitting a record level.

More and more agents are being asked for appraisals however and it will be interesting in the coming month to see if this results in more properties coming onto the market.

Our survey has only been running since April last year so one must be careful in over-reading these results as it is possible that there is simply a seasonal effect running through the data. In that regard real estate data for January to be released by the REINZ in a few days will give some good insight into whether perceptions of agents have been reflected in actions in terms of activity and price movements.

Thanks to Tony Alexander of the BNZ

09/02/12

Win Dinner for Two at Logan Brown

WIN Dinner for Two at Logan Brown Restaurant in Wellington.

Simply download my Property Update Newsletter HERE, fill out the form and either email or post it in to WIN!

Halina Kuchciak

your real estate expert

February 2012 Draw

Quick Tips for Home Sellers

5 Quick Tips to Make Your Property More Attractive to Buyers

Quick Tip #1

Get rid of clutter.

Throw out or file away any stacks of newspapers and magazines.
Pack away most of your small decorative items.
Make closets roomier by removing out of season clothing.
Clean out the garage.

Quick Tip #2

Wash your windows and screens to let more light into the interior.
Open all blinds, curtains and drapes, let the light in.

Quick Tip #3

Keep everything extra clean.
Wash fingerprints from light switch plates.
Mop and wax floors.
Clean the stove and refrigerator.
A clean house makes a better first impression and shows buyers that your home has been well cared for.

Quick Tip #4

Get rid of smells.
Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells.
Open the windows for circulation.

Quick Tip #5

Put higher wattage bulbs in light sockets to make rooms brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.

We have so many tips and ideas to improve your homes appeal and more importantly get you the best price possible.

Don’t take our word for it. This is what Liz and Barney of Wellington had to say:

Within Two Weeks we had secured an Offer that exceeded our Expectations
“...thanks to you both for the great job you did in the marketing and selling of our home. We listened to your recommendations, followed your advice and as you predicted, within two weeks we had secured an offer that exceeded our expectations! Thank you both for your great service, integrity and fantastic communication throughout the whole process; you were wonderful to work with.” – Liz and Barney Stephenson

Read what heaps of other Wellington home sellers have had to say - click HERE

Make the right choice and call us today, we’ll get you the best price possible.

Remember if you want to sell your home for the best possible price, simply call us, and we can show you exactly what needs to be done.

My associate John and I have 17+ years of Wellington real estate experience, heaps of contacts and the know how to find the right buyers and to get the result you want.
 
Call us now on 04 475 9780 or simply click HERE and we’ll contact you.

Looking out for your Interest

Cuts to fixed rate home loans are now shifting from the banks to the non-bank sector with Public Trust and Manchester Unity making some adjustments.

GoodReturns 07/02/11

Click here for all rate changes