Mortgage News August 25, 2019
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!

Estate Planning - by Tracey

A Will sets out your wishes for providing for your loved ones, and how your affairs are to be managed after you are gone. Dying intestate, which is dying without a valid will in place, creates a lot more pain, time and cost for the families left behind needing to deal with your estate. In your will you document who you would like to provide for including any special bequests or gifts.

You are, for example able to:

  • Appoint guardians for your children under the age of 18.
  • It documents any plans you wish to make for your funeral.
  • It also appoints an executor and a trustee to carry out your wishes. Your executor and trustee are responsible for estate administration. Being executor and trustee for an estate is often a complex job. It is important that whoever you choose has the right skills, this is why I recommend a specialist to assist you in putting this together

Wages & Employment Up

Unlike their cousins across the Tasman, New Zealand workers have seen strong wage growth, with the biggest pay rise in a decade recently recorded. According to Statistics New Zealand, average hourly earnings have increased 4% over the past year to $32.37 an hour, which is the biggest annual percentage increase since June 2009. The seasonally adjusted unemployment rate also fell in the June quarter from 4.2% to 3.9%, with the under-utilisation rate also dropping from 11.3% to 11%.

Real Impact of RBA Cuts

The Reserve Bank of New Zealand (RBNZ) recently cut the official cash rate (OCR) to a historic low of 1% in an effort to stimulate the economy. The domestic economy is slowing down, with the RBNZ doing what it can to inspire people to spend money or invest in more productive investments. As the benchmark for all interest rates charged by banks and other lenders, the OCR is undeniably significant. Despite the historic nature of the current lows, however, homeowners and potential first-home buyers should only expect modest savings.

Why are Allergies on the Rise

The world is becoming increasingly allergic to common foods, with children in particular likely to develop new allergies. When analysed on a global basis, the spread of allergies is far from even, with Western nations increasing at a much faster rate and specific countries much worse than others. While no-one knows for sure why allergy rates are increasing, a number of theories are being examined to explain the rising allergy crisis.

The Rise of the Microworker

The world of work is changing all the time, with long careers less likely in the modern world and microwork opportunities coming to the foreground. Microwork is a series of small tasks that combine together to create a single unified project. Microworkers are normally employed in the technology sector, as a kind of virtual assembly line that flows between skill sets and across continents. While microworking can lead to a number of opportunities, what it offers in agility and flexibility it often lacks in stability and job security. 

The Definition & Creation of Liveable Cities

Everyone wants to live in a location where life is easy to manage and stress levels are as low as possible. With most people in the Western world living in cities, politicians and town planners are constantly striving to create the most liveable conditions possible.  From transportation and accommodation through to work and school opportunities, there are lots of things to take into consideration when measuring liveability. Let's take a look at two leading ways to measure quality of life and see what it means for the future of city life.


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> In This Issue...
1. Welcome to August's Capital Comment...
2. Estate Planning - by Tracey
3. Wages & Employment Up
4. Real Impact of RBA Cuts
5. Why are Allergies on the Rise
6. The Rise of the Microworker
7. The Definition & Creation of Liveable Cities

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Kit Jackson and Tracey Verrenkamp

Phone: 04 495 5900

Level 1, 354 Lambton Quay

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