Mortgage rates likely to remain static

We are of the view that there will be no changes in mortgage rates this year.

We should ask, “Why would rates rise?

Interest rates will only rise when the economy starts to improve (it is not improving), when unemployment starts to ease (it is not easing) and when inflation becomes a threat. The official inflation rate is now at its lowest level since the early 1960s.

Until these factors change, interest rates will not rise.

This is good news for those with mortgages, since their interest rates will remain at these low levels for some time.

Short Term Finance

We currently have funding available for short term and bridging loans.

This includes low doc and asset lending.

The purpose of this funding can be fairly wide, refinancing of short term debts, purchase of boats, and carrying out subdivisions, to name a few.

One of our more popular reasons, is to assist people bring their tax payments and arrears up to date.

Our criteria are wide, but we require residential security.

We welcome your enquiries.

Capital Gains Tax

Numerous groups are calling for the introduction of Capital Gains Tax.

They mistakenly believe that this will slow down the property market and make housing more affordable.

Over the past three or four years, property prices have risen only in Auckland, which is growing rapidly and in Christchurch, which is a special situation.

Gains in other cities and provincial towns have been more modest.

If we look across the Tasman, where Capital Gain Tax was introduced in the mid- 1980s, house prices have continued to rise rapidly.

One could argue that Capital Gains Tax across Australia, actually caused house prices to rise.

The key is to making houses more affordable and increase supply.

This includes making it cheaper and easier to subdivide sections and bare land, and to allow the building of medium density dwellings, as they do in places such as Sydney.

Capital Gains Tax will not achieve this.

WOFs for Properties

Some commentators are suggesting that residential rental properties should be required to obtain a certificate of fitness on a regular basis – like a warrant of fitness for motor vehicles.

Why make this change? We have not needed them so far.

We should also consider the cost element as someone has to pay the assessor.

Landlords will not pay – they will simply pass this on to the tenant through higher rents. This is the last thing we require, given that rents now are already too expensive.

William Cairns and James Lockie are Executive Directors of General Finance based in Auckland.