Mortgage News August 17, 2022
Welcome to November's Capital Comment...

Apart from seeing a bit more sunshine over the past few weeks, not a lot has really improved since our last newsletter! COVID continues to dominate the news; interest rates have risen further; more regulation has made it harder to get people approved at the same levels as was previously possible and now the Black Caps have just missed out on claiming the T20 World Champions title! Christmas can’t come soon enough! 

Covid dominating the bulletins has meant that the large increase in interest rates has largely gone unreported by the media. They tend to only report the OCR increases (next OCR announcement due on the 24th November) but since mid July, interest rates have gone up by between 1 – 1.5% across all the fixed terms which is well above the 0.25% OCR increase in that time. The speed and scale of the increases have caught everyone completely by surprise. We will unfortunately find that a lot of people who opted for short term rates earlier this year will have a significant increase when re-fixing next year. It is important to highlight this early so that people can be prepared for it and make adjustments to their budgets early in preparation rather than being taken by surprise. At the moment we are finding that some people are looking to break out of their lower fixed rates and re-fix for longer now before rates go up any further. If you would like to look into this option, please get in touch.

After 12 years of these newsletters, the provider who has sent them out for us over that time has told us they can no longer facilitate it for us. So, sadly this is our last newsletter in this format! We are looking at alternative options and will look to start sending out newsletters again in early 2022. So, much as I hate to be saying Happy Christmas in November (!), we do wish you all the very best for the holiday season and hope you have a safe and enjoyable time with family. A big thank you to all our wonderful clients and referrers for your support this year. Without you, we would not be in business! We are all taking time out over the holidays but our phones will be on throughout and so if we individually can’t assist you, we can tell you which one of the team can! Take care and here’s hoping 2022 can be a little more normal!

The Rise of Electric Cars

Electric cars are well and truly on the rise, with sales up, stocks pumping, and industry giants ready to take over. Despite slow uptake in Australia and New Zealand, the world is already making a clear transition away from the internal combustion engine. While the cost of the average electric car is still higher than the cost of the average petrol car, the gap is getting smaller every day. As technology develops and production capabilities improve, market dominance is pretty much guaranteed.

Kiwi Homes Rise in Value

The average value of New Zealand homes has passed $1 million for the first time in history. Prices jumped by $50,000 in the last three months alone, with some regions up 10% for the quarter and much of the nation above 5%. While tighter credit conditions and COVID-19 have had an effect, ongoing lack of supply has helped homes to surge past this huge milestone. With the typical household balance sheet firmly concentrated in housing, and interest rate rises on the horizon, the Reserve Bank is reminding people to diversify.

We Are Going Back to the Moon

After more than 50 years, the human race is finally going back to the Moon with Artemis. While NASA ended lunar flights back in 1972, it plans to move forward by flying back to the Moon and beyond. If everything goes according to plan, astronauts are set to land on the lunar south pole in late 2024. While this plan has been labelled unrealistic by some experts, NASA and its partners have a new sense of ambition and drive that hasn't been seen for decades.   

Reserve Bank Pushes Diversification

As property prices keep rising and interest rates start their upwards creep, Reserve Bank Governor Adrian Orr has reminded Kiwi households about the importance of diversification. A total focus on housing may have served people well over recent years, but according to the RBNZ, the tide is about to turn. In a speech titled 'Housing Matters', Mr Orr went back to basics on portfolio management, pleading with Kiwis to diversify their assets and avoid the trap of stacking their investments.


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> In This Issue...
1. Welcome to November's Capital Comment...
2. The Rise of Electric Cars
3. Kiwi Homes Rise in Value
4. We Are Going Back to the Moon
5. Reserve Bank Pushes Diversification

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Kit Jackson, Gareth Humphreys and Tracey Verrenkamp

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