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Hello Reader,

October has been a very busy month even though the LVR restrictions only became official as of 1st October. It appears the market has adjusted just as the legislation became official due to the last 3 months of RBNZ insisting bank honour the spirit of the agreement immediately when announced in July.

Watch this space as we expect more funding to become available for home owners with less than 20% in the coming weeks as banks fall under the 10% cap.

We are excited to announce we have two new products to offer here at Loan Market!  
1. Small Business lending which launched on the 20th October 2016 enabling us to offer unsecured loans up to $250,000 at market competitive rates,  
Read More 

2. Car Finance Product which we will be launching on the 1st November 2016 Read More  

If you or your clients want any further information on either of these products please contact us.

Last night we ran a Q&A discussing the Reserve Bank legislation changes and banks policies. For those who attended, we hope you found it informative for yourselves and your clients. 

On a sad note farewell Sam.....

After 3 and a half years with Loan Market Sam has decided to take up a business opportunity in a completely different sector here in Queenstown. Any current and ongoing deals under Sam will be taken over by Stewart with the support of Linda so all your clients will be in good hands and business as usual.

Sam has been a great asset to the team and we will miss him in our office.

We wish him all the best with his new venture and especially with impending fatherhood. Good luck to you and Jill and we can't wait to meet your new addition.

Sam's last day will be Friday - 28th October 2016.

Any questions please do not hesitate to contact us.

With all the talk of foreigners looking to invest on New Zealand soil, this month in the market update I talk about the impact offshore investors are making around the country.

Read on to see how I discuss the financial difference between paying for body corporate and buying a freestanding house.

As always, I’m here to answer any questions you or your clients may have.


All the best,
Stewart Mitchell
Market Update
Foreign Investors - What’s happening in NZ?

Property investment by foreigners seems to be ever growing in the New Zealand market, with an increasing number of people from outside the country wanting to buy real estate.

Whilst people from abroad are actively investing in the real estate market, restrictions have been placed for those coming across the shore to buy.

After new legislation passed in October 2015, a new set of rules applies to ‘offshore’ buyers. According to New Zealand’s Overseas Investment Office, who is in charge of foreign investment policies, anyone wanting to buy property in NZ after 1 October 2015 will need an IRD number which will need to be provided before settlement date.

Most banks in NZ have stopped lending to foreign investors which has led to them borrowing from their home countries or bringing cash into the country to make purchases.

What impact does it have on NZ property market?

Foreign investing has made a significant impact on the property market all around the country. New Zealanders have seen an increase to the cost of investing in real estate, especially in Auckland where property prices have hit the one million dollar mark.

What does the future look like?


Whilst these overseas investors come from different countries, most originate from the UK, China, Hong Kong and Singapore.The growing number of foreign investors is likely to continue to grow with a large number of developments and hundreds of homes being built. 

What's trending
Body corporate fees VS buying a house 

Buying an apartment, unit or townhouse usually means being part of a body corporate who handles the management and upkeep of the building and sometimes the entire vicinity. It is responsible for common areas and in some cases may pay for services like pools, gyms and in some cases concierge. This incurs ongoing costs to cover these services.

The same body corporate is also in charge of making sure the building is adequately insured.

In most cases there will be a ‘sinking fund’ in place which is a pool of funds that can be reached into, in the event of unexpected costs such as major structural repairs or emergencies that are not covered under insurance.

On the other hand, living in a house (typically freestanding), means the responsibility of taking care of the maintenance and arranging insurance falls on the owner. However, there will not be any ongoing costs for strata or any other services.

Here, we look at some of the pros. and cons. of the different dwelling types.

Body corporate

Advantages

Cost of maintaining the building is shared and the building management will usually organise for the work to be done.

Structural housing insurance could be cheaper because you purchase insurance in bulk as part of the owners corporation.

Maintenance; cleaning, lawn mowing, gardens, insurance, electricity in common areas and general repairs.

Proposed changes, general disputes and collection of funds from the owners to cover these costs is all handled by the body corporate.

Disadvantages

As a unit/apartment is typically smaller than a house and there are common walls with others, there may be restrictions to the type of renovations that can be made.

Strata levies can cost annually, anywhere from $1,500 to $30,000 (potentially more), depending on the services provided and the type of dwelling. These fees are typically paid quarterly.

Free standing house

Advantages

There are typically little or no restrictions to renovations and/or extensions (unless placed by the council).

Any costs to repairs and/or renovations is a benefit to the owner.

Disadvantages

Any form of maintenance or repairs is the responsibility of the owner, entirely at their cost.

Because the cost isn’t divided with anyone else, other factors like property size and/or insurance would usually be absorbed by the owner, solely.

So what’s the better investment choice?

There is no right answer, here. It all comes down to personal preference and financial circumstance. Lifestyle suitability could also be a playing factor when deciding between investing in a body corporate dwelling or a house.
Cash rate
2.00%
Best
Variable rate*
5.19% p.a.*
5.65% p.a.*
comparison
Best 2 year
Fixed rate*
4.15% p.a.*
4.75% p.a.*
comparison
For more information call your local expert
Stewart Mitchell, Mortgage Adviser
M Stewart - +64 21 762 606 & Sam - +64 21 236 0229 | P +64 3 4411307
stewart.mitchell@loanmarket.co.nz
http://www.loanmarket.co.nz/queenstown
 
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*Variable rates current as at 26/10/2016 & based on Resimac. Terms and Conditions, fees and charges may apply. Rates subject to change. Approved applicants only. The comparison - rate is the median rate of all lenders as published by www.goodreturns.co.nz. Warning: This comparison rate is true only for the example given. Different term, fees or other loan amounts might result in a different comparison rate.

**Fixed rates current as at 26/10/2016 Terms and based on SBS Bank special rates. Conditions, fees and charges may apply. Rates subject to change. Approved applicants only. The comparison rate is the median rate of all lenders as published by www.goodreturns.co.nz. Warning: This comparison rate is true only for the example given. Different terms, fees or other loan amounts might result in a different comparison rate.

Warning: This comparison rate is true only for the example given. Different term, fees or other loan amounts might result in a different comparison rate. Terms and Conditions, fees and charges may apply. The comparison rate is calculated on the basis of a $150,000 secured loan over 25 years.