Mortgage News May 07, 2021
Welcome to April's Capital Comment...

Well things were definitely quieter this time last year as we were mid-lockdown and the residential property market had well and truly halted. What a difference a year makes with activity still booming and prices so much higher than they were 12 months ago. Nobody could have predicted what has happened in that time including the Government's recent announcement around investment properties. The extension of the bright line test was no surprise but the removal of the ability to claim interest as an expense has certainly ruffled feathers. Calling it a loophole was completely wrong and didn't help the delivery of the news. It will be interesting to see what happens over the next few years as the impact hits. Will it help first home buyers into homes or soften house prices,  I don't think so in the near term. There are still plenty of owner occupier buyers who are desperate to buy and pay top dollar to secure a property. Once those buyers are out of the market (and assuming they are not replaced by more buyers with deep pockets coming into the country), then maybe the less well funded first home buyers will have more of a chance but that's a while off yet based on the lack of available stock and the fact that new builds seem like they will be exempt from the new rules. Time will tell...

No changes to interest rates this month, still a 50/50 call between 12 and 36 months in our opinion depending on whether you want to stay short and observe or fix and forget. 24 months doesn't make any sense as it achieves neither and 12 + 12 will be cheaper based on the Reserve Banks commentary.

Thanks as always to our wonderful referrers who pass on our details to their families, friends and colleagues. We have sent out more $100 Prezzy Cards to them by way of thanks this month than ever before! Remember, it's as easy as passing on our details and you receive $100 in return when a mortgage or risk insurance product is put in place! 

Enjoy the school holidays and the long ANZAC weekend... 

Mortgage Gareth

If you have a loan due off its fixed term soon it will highly likely be coming off a higher rate than what’s currently available.

If you are making Principal and Interest (P&I) repayments the minimum repayment will go down, the key will be to keep the repayment the same as it was (or higher if you can). You will be used to paying that amount already and it will have a big impact –

$450,000, 25-year term, fixed 12 months ago for a year at say 3 % had minimum payments of $2,134 per month.

The loan balance is now $437,725 and the 1-year rate is 2.29%*. The new minimum payment is $1978 per month.

Keeping the repayment amount the same as it was at $2134 means an additional $156 per month is being paid off the loan balance. This reduces the loan term down to 21 years 9 months and saves $13,226 in interest over the life of the loan.

That’s quite a big saving for not really changing how you do things!

Can I afford Income Protection Insurance?? by Tracey

I think a better question to ask yourself is “can I afford not to have Income Protection Insurance?”.

Most of us don’t work simply for the love of it.  We work to earn money to support our families, have a lifestyle we enjoy and provide for the future, so we can have a reasonable lifestyle in retirement.

Income protection is one of the most undersold insurances in New Zealand, but the truth is most families would be financially vulnerable if the primary income earner in a family could no longer work. Our ability to work is our greatest asset and our inability to earn an income would cause us the most financial stress with serious implications if it were to continue for an extended period of time.

As an adviser, income protection insurance (in its various forms), is one of the most valuable tools in our arsenal when it comes to protecting you from a financial loss.

If you calculated how much income you could earn every year over your working life it would equate to millions of dollars.  If you had a ‘tool of trade’ that generated that source of funds, would you not insure it?  You are that ‘tool of trade’.

Government Attempts to Help First Home Buyers

The New Zealand government has made big moves to dampen property prices. Prime Minister Jacinda Ardern and her Labour colleagues are hoping to bring stability to the housing market and get more first time buyers into homes. Instead of climbing the property ladder, this newly articulated approach is about making houses more affordable by valuing them as "homes" rather than investments. The family home will be unaffected by the changes, with a 10-year limit creating a new threshold for speculative market behaviour. 

New Hobbies for Winter

As the cold winter months draw closer, it's a great time to develop a new hobby. Whether you want to get outside and brave the fresh air or snuggle down in the warmth of a blanket, winter is a great time to discover new interests and spend time doing the things you love. From solo activities to new hobbies with partners and friends, let's take a look at some fun activities you can enjoy over the coming months.   
Migration Figures Drop Sharply

Migration numbers are significantly down in New Zealand, as COVID-19 puts the handbrake on long-term international arrivals and global tourist movements. New Zealand's overall population growth from migration was down 95% in February 2021 when compared to February 2020, with this huge drop putting pressure on multiple domestic sectors. As the Australia-New Zealand travel bubble kicks into gear and global vaccination rates grow slowly each month, Kiwi airports are likely to see a little more traffic in coming months.

Exercise Doesn't Have to be Boring

As we get ready for the coming winter, it's a great time to ingrain new health and lifestyle habits. Contrary to popular belief, exercise doesn't have to be boring. From yoga classes in front of the TV to ocean swimming and beyond, fun fitness activities help you to get off the couch and live a more productive lifestyle. Let's take a look at some novel ways to get fit in 2021, after all, fitness is so much easier when it's fun.  


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> In This Issue...
1. Mortgage Gareth
2. Can I afford Income Protection Insurance?? by Tracey
3. Welcome to April's Capital Comment...
4. Government Attempts to Help First Home Buyers
5. New Hobbies for Winter
6. Migration Figures Drop Sharply
7. Exercise Doesn't Have to be Boring

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Kit Jackson, Gareth Humphreys and Tracey Verrenkamp

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