A world of constant change

The one constant we have in the market at present is change, the government has recently announced changes as of 1 October to capital gains tax on property, new requirements for overseas borrowers, the required amount of equity to buy Auckland investment property (30%) along with changes to the Kiwisaver scheme and the amount of lending the banks can do for low deposit borrowers…that’s quite a list!

We have also seen a cut to the official cash rate which was reduced by 25 basis points on 11 June to 3.25%

The Reserve Bank commented “The New Zealand economy is growing at an annual rate around three percent, supported by low interest rates, high net migration and construction activity, and the decline in fuel prices. However, the fall in export commodity prices that began in mid-2014 is proving more pronounced. The weaker prospects for dairy prices and the recent rises in petrol prices will slow income and demand growth and increase the risk that the return of inflation to the mid-point would be delayed.

Inflation has been low due to falling import prices and the strong growth in the economy’s supply potential. Wage inflation and inflation expectations have been subdued.”

At least one further .25% rate reduction is expected this year.

At the time of writing this article (11 June) a number of banks have passed this .25% discount onto clients with floating rate home loans. I suggest fixed rates will be under review and we are likely to see some reductions in fixed rates from the banks very soon.

It may be timely to review your current loan structure and to also check if your bank is providing you with the best package available – I am seeing very competitive offers on a daily basis with excellent cashback offers and rate discounts on offer.

Please get in touch with me if you would like to discuss your options.