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Broderick Consulting
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Your Future - Together We love to help New Zealanders - people just like you - to achieve their financial goals, and to protect their business, family, assets and lifestyle.
Your Future - Together We love to help New Zealanders - people just like you - to achieve their financial goals, and to protect their business, family, assets and lifestyle.

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What does The Reserve Bank have in store for 2014?

2013 was a year in which for me started well, and then hit a massive road block - The Loan To Value (LVR) Restrictions . Whilst not completely killing the market (the likes of which I haven't seen since the Global Financial Crisis first hit) it certainly had a large impact on the number of potential homeowners that we were able to help. Amongst this were lending changes that continually shifted the goal posts on who and how we could assist both new and existing clients.

That said, I am pleased to see that the Reserve Bank has made positive changes to the LVR which will help heading into 2014. The exemptions recently put in place are for:
•    Refinancing of existing lending
•    Portability to a new home
•    Bridging loans
•    Construction loans
Note - specific criteria applies to these areas along with standard criteria at the time, so feel free to contact if anyone needs to discuss this further.

So it seems to be very clear that increases in the cash rate to probably occur from the second quarter of 2014.
The Reserve Bank Governor Graeme Wheeler said on the 12th that he expects the official cash rate to rise 2.25% over the next nine quarters from its current historic low of 2.5%, and many are picking the cash rate to be 75 basis points higher by June.
This may be driven by such factors as inflation having risen to 1.4% from 1.0%, and although it is within the target of 2% is expected to increase further. Business confidence hitting  a 15 year high, house prices having risen 18% over the last 2 years, retailers having a booming festive season so far and the rebuild really getting underway in Christchurch.

We may have already seen the beginnings of bank rate changes with several lenders providing some surprising rate increases just prior to Christmas.

The challenges that I mentioned earlier have provided at times great frustration for not only myself but many clients.
However, they have also reinforced the value which we add to the market, by being aware of what subtle differences there are between each lender's criteria at any given point, and therefore opportunities present themselves for us to assist.

I would like to share with you an email I was humbled to recently receive from Chris and Fiona:
(please click the link below)
http://www.insurancebrokerschristchurch.co.nz/about-us/testimonials
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The cash rate remained unchanged again on Friday, but stronger words are coming from the reserve bank about inflation, possibly off the back of house prices.
The OCR rate directly effects the short term rates whereas the longer rates are influenced from wholesale pricing, and in particular how strong the U.S. economy is.
So with the U.S. getter better, we have seen some increases in the longer term rates, and although there is still some good value rates available, we may be on the up swing for rates across the board.
Expectations are that the cash rate may move in the near future too.
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Recent client successes

It's great when we can help first home buyers to purchase their first home; and recently we have helped several clients achieve their goal in what is a very hot, and fast moving market.

The great thing is that we get to guide and assist them through the whole process, which they tell me really helps to give comfort and ease the nerves of this first time experience. We see ourselves more as a buyers advocate rather than just a "mortgage broker". Gone are the days where it was all about best interest rate; now, clients want more than just an over the counter experience - we'll leave that to the banks!
What we do is provide as much assistance and information as the client needs and wants, provide access to our trusted professional network such as valuers, and lawyers if required, and then once the client has secured a property we'll negotiate for a great deal. But more than that we are an intermediary that is not aligned to any one lender, and always has the clients interest at the centre of our advice.

Working together in the long term allows us to continue providing suitable advice and assistance whenever the client needs and, as one of first home buyer recently stated "I really felt that I am important - not just a number"

As you can imagine, we were absolutely over the moon with that feedback!
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It looks like the bottom of the interest rate cycle may have arrived as there have been some increases of late in the longer term rates.
However while this has also combined with some lenders tightening their lending criteria, there certainly are some good options for 1st home buyers through to investors.
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