But when it comes to home loans, one size most definitely does not fit all, and that means there is no simple answer to what loan type you should choose. Instead, you need to take into account the economic conditions in conjunction with your own current situation and future goals.

The Reserve Bank of New Zealand (RBNZ) is currently returning the official cash rate (OCR) to ‘more normal’ levels after the low cash rate position adopted during the global financial crisis. Although some weak economic data suggests that the timing and pace of increases may be slower than originally expected, at this stage the RBNZ is still looking to raise the OCR to around 5 per cent.

Changes to the OCR generally flow through to the floating rate offered on home loans, but with the increases slowing down, there is the potential to make some big inroads into your debt while floating rates are still relatively low.

Meanwhile, fixed rate home loans, particularly over 2- and 3-year terms, have been falling recently, making these rates very attractive to borrowers in the here and now.

So which type should you choose?

When you are considering what type of loan is the right one for you, interest rate alone should not be the deciding factor. It is important to consider the entire home loan package when making a decision, in conjunction with your current situation and medium term goals.

Here are some questions to ask yourself to help with your decision:

• What do I want/need from my home loan in the short to medium term?
• What is the difference between fixed home loan rates and floating home loan rates?
• Which home loan/s in today’s market will suit my situation?
• How flexible are different fixed and floating home loans?
• What interest rates are currently available from a wide range of lenders?
• What are the costs for different fixed rate and floating rate home loans?  How do they compare over a certain period of time?
• Are there special home loan offers available in the market?

To compare fixed and floating rate options, or to review your current home loan, make an appointment today.

Life insurance policies will vary greatly on how much is paid out. Generally speaking, the larger the payout you are after, the higher your premium will be. Other factors which may affect the cost of your premium include whether or not you are a smoker, or if you have any existing medical conditions.

What you are covered for will also vary between policies so it’s important to understand what events will trigger a payout. Most policies will cover a range of accidents and illnesses.

Once you have life insurance, you should make sure you review it regularly to ensure your cover is adequate. Some policies will allow you to automatically increase costs, by indexing for inflation, for example, but some won’t so you will have to adjust your policy manually.

Your risk adviser can assist you in determining your life insurance requirements and to making changes to your existing policy.

After easing back to $350,000 in May, the national median residential property price rose to $352,500 in June.  This figure is 3.67 per cent higher than last year’s June median of $340,000 and also an increase on the previous highest June median of $347,500 recorded in 2007.

Releasing the figures, REINZ President Peter McDonald remarked that the predicted post-Budget blues have not come to fruition and we are not seeing the forecast fall in prices.

“What we have is a genuine rather than a speculative market, with people seeking and buying homes to meet their own needs,” Mr McDonald said.

He did warn, however, that the REINZ statistics should not be taken as an indicator individual house values are still rising. They are purely the median of all sales during the month and can be impacted by the number of properties sold at either end of the price bracket.

“The average gap between listing and selling prices last month was relatively small at only four to five per cent which indicates successful vendors are being realistic in assessing the market value of their home,” Mr McDonald said.

Reflecting the traditional winter slow down of the real estate market, residential property transactions of 4575 last month were down on the May total of 5206, and sales of 6040 in June last year. But the total is more than the 4305 sales transactions recorded in June 2008.

“The national median number of days to sell increased from 43 in May to 45 in June but was over 60 days in Waikato/BOP, Hawkes Bay, Manawatu/Wanganui and Taranaki, and 86 days in Central Otago Lakes which suggests significant regional differences in the state of the property market,” Mr McDonald commented.

The total value of residential sales, including sections, in New Zealand in June was $1.96 billion, a decrease on the May total of $2.27 billion. The breakdown of the values of the properties was 156 for $1 million plus, 539 for $600,000 – $999,999, 1,162 for $400,000 – $599,999 and 2,718 under $400,000.

Movements in the median price varied widely from district to district across the country with falls as high as 11 per cent in 4 regions, and increases of up to 10 per cent in the other 8 when compared with the same month last year.

The largest rise in the median price was in Canterbury/Westland, which is up nearly 10.2 per cent on the previous year and the largest falls were in Northland down 9.6 per cent and Southland down 11.1 per cent.

French for `deceive the eye’, the door stickers allow you to easily enhance your portal into the next room into a portal to a new world – such as old metropolitan stairs, an empty dresser, French catacomb stairs, modern commercial escalator and elevators, cathedral corridors, or a cupboard packed full to the brim with books.

Soft consumer spending and a lower-than-expected inflation outlook have many suggesting that the RBNZ will move the OCR to between 3 and 4 per cent by Christmas and then pause to determine the effect on interest rates and the economy.

RBNZ Governor, Alan Bollard, commented that at this time it was still appropriate to continue removing the extraordinary stimulus setting, but the pace of further interest rate increases is likely to be slower than originally predicted.

It would seem likely also, given the RBNZ’s current stance, that the OCR peak in this cycle may be marginally lower than forecast.

Borrowers should continue to monitor developments and update their mortgage strategy in line with any changes to the market. A regular home loan health check can assist you with this.

The national affordability index improved 11.1 per cent over the past year, which is good news for first-home buyers. It improved by 2.7 per cent during the quarter ending May 2010 and is now about the same level as it was in 2004.

The average weekly wage rate increased by $3.70 over the quarter but this was offset by a 0.16 per cent decrease in the average monthly mortgage interest rate.

Professor Bob Hargreaves, who compiles the Home Affordability Report, said the housing market remains subdued with the national median house price static.

“This is due to tighter lending criteria used by most lenders, warnings about pending mortgage interest rate increases, changes to the taxation treatment of rental houses resulting in reduced total returns for investors and the slow recovery in the world economy,” Professor Hargreaves said.

Over the past quarter, eight out of twelve regions showed improvements in affordability: Waikato 7.6 per cent, Manawatu/Wanganui 7.2 per cent, Taranaki 6.2 per cent, Hawke’s Bay 4.5 per cent, Wellington 4.5 per cent, Auckland 2.5 per cent, Nelson/Marlborough 2.1 per cent and Canterbury/Westland 2.1 per cent.

Regions showing quarterly reductions in affordability were Northland 2.4 per cent, Central Otago Lakes 2.2 per cent, Otago 0.9 per cent and Southland 0.7 per cent.

Already in use overseas, SmartBond works to remove troublesome payment scenarios between landlords and tenants by offering landlords a full five weeks cover for unpaid rent or wilful damage, in return for a small weekly premium. Premiums are calculated as a percentage of a tenancy’s weekly rent at 2 per cent.

An additional option of rent protection insurance (premium 0.5 per cent) also gives landlords the security of knowing that their tenant’s rent will be paid (up to a maximum of 12 weeks), should the tenant become redundant, bankrupt or disabled.

Based on a similar system employed in Switzerland, Belgium and the UK, the system also offers tenants the additional benefit of applying for pre-approval as a SmartBond tenant. The tenant is issued with a SmartBond Approval Certificate that they can use to streamline future dealings with potential landlords.

For more information visit www.smartbond.co.nz.

Income protection insurance may offer a cost-effective solution to ensuring that you still have access to the money you need, via a monthly benefit payment.

Income protection insurance comes in a variety of different policy types, including indemnity, agreed value and loss of earnings. Which type of policy will suit you will depend on your situation, particularly how stable your income is, so talk to a risk adviser for assistance in determining your requirements.

Other important considerations for choosing the right income protection policy will include the insurance premium, waiting times, payment periods and the legal definitions of illness, injury and disability that apply to your policy (which will ultimately determine whether or not you are eligible for an insurance payout).

It’s important to note also that a ‘waiting period’ for income protection insurance is not quite the same as a waiting period for health insurance. With income protection insurance, the ‘waiting period’ on your policy refers to how much time you need to wait after the loss of your income before your policy begins to make you payments. For example, if you choose a 3 month waiting period, it will be 3 months after your income stops before you receive your first insurance payment.

If you already have income protection insurance, remember that it’s important to review your policy whenever you change jobs to ensure that it still offers the correct level of cover, at the right price, for your current situation.

Herbs can be grown in gardens, pots, tubs, in full shade or sun so are easy plants for any conditions.  It is simply a matter of choosing the right ones for your situation and needs.

Many, such as rosemary, lavender, thyme, lemon grass and wormwood, require very little water. 

In fact, they not only thrive in dry conditions but are more effective and stronger when their essential oils are not diluted by over-watering.

Lemon grass is a fragrant alternative to other decorative grasses which have become popular with landscapers in the past few years.  It grows in clumps so will not spread too far, but is easy to propagate and just needs regular clipping to flourish (pop the clippings into a pot of hot water for a refreshing tea). 

Unlike many other plants, the foliage of herbs is always fragrant. Who can walk past a row of lavender bushes along a path without touching them to release the perfume? Other herbs that can be grown as aromatic shrubs or small trees include the ever-popular rosemary or the pungent lemon verbena, both of which can be used in teas and cooking. 

For visual contrast in the garden, try planting a few silver-leaved wormwood or southernwood bushes.  These plants are drought-resistant and require very little attention, except for regular pruning to make them flourish. When it is time to trim them, dry the leaves well and place them (with some of your lavender) in bags in drawers or cupboards to keep away moths. 

If you want to grow herbs for cooking, eating or drinking, there are a few easy essentials, such as mint, parsley, basil, chives and thyme. These will grow happily in the garden or pots on a balcony – the main thing is to have them in easy reach of the kitchen. 

Some, such as parsley or the mint family, prefer shade and lots of water, while others thrive in hot, dry conditions.  It is best to experiment – the plants will soon let you know if they are not happy where you’ve put them.

Other culinary herbs such as coriander are notoriously difficult to grow consistently and tend to `go to seed’ quickly. To grow these successfully, try putting them in a place where they can drop their seeds and grow again – after a while you will find you have a constant supply.

Many nurseries now stock perennial strains of the more popular annuals like basil and coriander.  They tend to be hardier, woody shrubs but will grow all year round as long as the flowers are cut back when they appear.

For those more serious gardeners amongst us, herbs are often used as `companion’ plants, as their essential oils repel insects and encourage growth in certain plants. 

Basil grown amongst tomatoes makes them healthy and increases yield; pyrethrum, garlic and chives defend roses from aphids; marigolds are said to kill root nematodes in the soil.

Fennel, pennyroyal and chamomile can all be used to deter flies, mosquitoes and ants.
   
Whether you just have a few culinary herbs near the kitchen window, some shrubs near the front door for perfume, or decide to cultivate a traditional herb garden, you’ll find they are relatively low maintenance. Most require little more than to be used constantly, as they will all flourish when cut back.

Remember when you cut them back, that most of your herbs can be dried for use in fragrant sachets, teas, or as seasonings year round. Hang them up or place them on paper in a warm dry room out of the sun and wind until they are brittle and completely dry.  Then put them into bags to hang in your closets, or store them in airtight jars until you are ready to use them in the kitchen. 

The RBNZ has been indicating for most of 2010 that it would start to remove the policy stimulus of very low cash rates ‘from mid-2010’.

The increase has gone ahead despite some financial turmoil in European markets, and, closer to home, an announcement in the annual Budget that the GST will be increased.

In the statement following the announcement yesterday, the RBNZ governor, Alan Bollard, said growth in Asia and Australia, and the recovery in the US, has helped to boost export value. The local labour market, and residential property and business investment, have also been positive.

Borrowers should expect further increases to the official cash rate, but thanks to increased cost of funding for lenders and an increase in the number of New Zealanders on floating rate mortgages, it is expected that the OCR will not rise as high or as sharply as it has in past cycles.

For an assessment of how the increase in the OCR will affect you, or to discuss a plan to manage any future rises, contact us today.