Mortgage News July 27, 2021
Welcome to July's Capital Comment...

What a month! In a normally quiet time of the year with school holidays and the winter market slowdown, the banks have completely changed that by unexpectedly raising their rates last week. Expectations were that the OCR would start to go up mid to late next year with a few economists predicting earlier in 2022. However, some very strong data has seen most economists now predicting an increase as early as next month. As a result, all rates (less floating at this stage) have gone up very suddenly in the last week or so. It means that not only are we likely to have said goodbye to record low rates but it is now harder than ever to decide on how long to fix for. It is amazing that only a few months ago there was talk of negative interest rates and now we are moving back up...nobody could have predicted that! But the world still seems an unstable place and it will be interesting to see how fast these increases happen...it's not an easy job ahead for the RBNZ.

Whilst rates have gone up, it is important to remember that they are all still incredibly low and that banks have always ensured that when lending to clients, they had plenty of spare capacity when determining how much they can borrow. It's time now for clients to realise that too and to start to budget accordingly. As always, we are happy to answer any questions or concerns that you may have.

Possibly even more surprising this week was that the Olympics have started. Fingers crossed the games are not cancelled and our athletes can fulfil their dreams. COVID has spoilt so much and it would be good to have a success story to warm us up!

Thank you as always to our wonderful referrers who we thank with a $100 Prezzy Card for a successful mortgage and risk insurance referral. Your support is warmly appreciated! Take care.



House Prices up almost 30% for the year

New Zealand house prices continue to move upwards while slowing down. While the property market has been dampened by new restrictions, five out of 16 regions managed to reach record heights in June. The national median price rose by almost 30% to $820,000 on an annual basis, with soaring prices in Wellington and low inventory levels increasing pressure across the country. While building stock is likely to grow in coming months, a rise in mortgage rates may come sooner than expected.    


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Insurance update by Tracey

This is an article published on the Partners Life website on 2nd June under “News and Views” and explains how you can gain extra insurance cover without the hassle of form filling or a health assessment. All insurers offer options like this. Keep that in mind so when your insurance policy renewal rolls around each year, you can take advantage of these benefits and not miss out if they apply to your circumstances.


What are ‘Underwriting- Free Increases’?

Underwriting-free increases are a handy way to gain extra cover, without having to spend your valuable time filling out forms. They let your cover automatically increase, without having to go through the usual full medical and current health assessment.

So even if your health has taken a hit since you were last underwritten, you may still be able to get extra cover. And even if life is keeping you busy, your insurance has still got your back.

Let’s take a look at the three types of underwriting increases – Consumer Price Indexation (CPI), special events increase, and the future insurability option.



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Why is Processed Food Bad

We are always told that processed foods are bad, but few people ask why. Foods often need processing to make them digestible, with different methods and techniques available to preserve food, add flavour to food, and make food production safer and more consistent. However, despite these obvious benefits, food processing has also been linked with numerous health problems. Let's take a close look at the complex relationship that exists between food processing, nutrition, and human health.


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Higher Mortgage Rates on the Horizon

New Zealand home owners should expect rising interest rates in coming months, as stubborn house prices and low inventory levels highlight underlying market pressure. While the market barely moved in June results, with 0.3% growth recorded, annual figures were strong and supply issues are very real. The surge in house prices from late 2020 may have come to an end, but pressure remains in key markets. Borrowers are being advised to budget for higher interest rates, which may come sooner rather than later.


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The Link Between Urban Green Space & Happiness

If you've ever felt happy when visiting a park, garden, or reserve, you're certainly not alone. According to a recent study, there is a recognised link between green spaces in urban environments and the happiness of residents, workers, and city visitors. From inner-city botanical gardens to manicured parkland and riverside pathways, access to green spaces provides much more than aesthetic pleasure. As city planners and politicians attempt to reinvigorate central business districts in a post-COVID world, we have a unique opportunity to create vibrant new green spaces.  


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Global CBDs on Life Support

The central business district is on life support, with cities around the world struggling to spring back into life. From New York to San Francisco, from Auckland to Melbourne, the CBD looks very different since the global pandemic. There are many reasons for this shift, including more remote work opportunities, less disposable income, and a growing distrust of public spaces due to health concerns. While some cities are showing new signs of life, politicians and city planners are struggling to address the ongoing exodus.


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> In This Issue...
1. House Prices up almost 30% for the year
2. Welcome to July's Capital Comment...
3. Insurance update by Tracey
4. Why is Processed Food Bad
5. Higher Mortgage Rates on the Horizon
6. The Link Between Urban Green Space & Happiness
7. Global CBDs on Life Support

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Kit Jackson, Gareth Humphreys and Tracey Verrenkamp

Phone: 04 495 5903

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Thorndon Wellington 6011


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