|Welcome to August's Capital Comment...
Everyone was certainly taken by surprise by the 0,5% reduction in the OCR a couple of weeks ago! The 0.25% expected drop had already been factored in by the banks but the extra 0.25% is now trickling through and short-term rates are edging a little lower. Banks have passed on most of the drop to their floating rates but in reality, very few people are floating (except for their Revolving Credit or Offset portions) and so that impact is minimal. We continue to suggest fixing in for 12 months unless there is a very good reason for doing otherwise but we also continue to wonder how much lower it can go...if at all? The pressure on the term deposit rates is such that surely there can't be much more movement South?! But then we've said that since the rates were in their low 4%'s and look where they are now...! It is certainly unchartered territory and a great opportunity to hammer the principle as hard as possible whilst rates are this low.
August is a typically quiet time of year for listings and that seems to be the case this year too in Wellington. Things typically pick up in September before going quieter again during the school holidays and then a flourish up until Christmas. We expect that to be the same this year but with potential softening of the LVR rules later this year; no change to the current CGT model and with these low interest rates, we are expecting greater competition with investors becoming more active. So being ready and having finance approved is important to improve your chances of success. Let us know as soon as possible if you would like to get finance approved.
Although I've said that the market is quiet, we are still sending out plenty of $100 Prezzy Cards for our successful new mortgage and risk insurance referrals so thanks to all those of you who are passing on our details and receiving those Prezzy Cards...all pretty easy and a win win!
By the time the next newsletter is sent out the Rugby World Cup will just have started so fingers crossed for a great result!