still toss a coin between staying floating and opportunistically hopping into a one to three year fixed rate.
Alexander says at the margin the risk remains that the Reserve Bank does not take the official cash rate in a straight line manner to the 6% level it has pencilled in for early 2012 and that suggests those choosing to stay floating won’t necessarily be worse off than fixing out to then.
“Note as ever however that no-one can avoid higher funding costs if they face a fixing decision now because of the risk floating rates are near their peaks in three years time,” he says.

Our advice at this stage is to hedge your bets and split your loan. If you would like some of advice or have a question please just ask Suzanne Isherwood on 0800 226 226!

The million dollar question that

we are asked at the moment is

“what do you think will happen to the interest rates

this year, how high will they go?”

A lot of people are uncertain about what’s happening with interest rates so they are going on the floating rate to watch and wait. People are doing a mixture of variable and fixed rates and we want to make sure when they look at what’s available they see they get a good rate.

One of the major banks says most people are looking to fix because it is perceived that rates will go up in the middle of the year, however there is still strong demand for the floating rate with 40% of drawdown’s on the floating rate.

Another economist says we are seeing a change in the floating rate now because of weak data and unemployment numbers which suggest the official cash rate, which is at a record low of 2.5%, won’t rise until June. Previously many economists were expecting a rise in March or April. He says if any other banks make movements he expects them to be minor because there has not been much of a change in 90-day bank bill yields and it is more expectations of them changing rather than the immediate cost of borrowing changing.

He believes the option of floating looks best for most people and as we approach the time when floating rates start rising – mid-year – for a while the optimal thing may be to fix one year, as many are still choosing to do at the moment. His advice for borrowers is to budget for about a 3% rise in floating rate borrowing costs between the middle of this year and the end of 2011.

No change from last week with Interest Rates of the week:

6 months  5.69%

12 months  6.15%

18 months  6.60%

24 months  7.20%

36 months  7.79%

48 months  8.49%

60 months  8.60%

ASB however did move down their rates this week, which is a welcome change as they have been leading the charge with rates going up!

During the week I met a client of mine who is considering whether to sell. We have talked about this sale over the last two or three years. She asked me, “Is now the right time?”, and then she said ” Stop being a real estate agent and tell me what you really think”.

I laughed- real estate agents are so full of bluff and bluster, (I’m being polite)-it sometimes is hard to know when we are being real or just spouting a line to get a listing! So I said, “You want me to be enthusiastic and positive, don’t you?!”

So, Is it really the right time to sell? Well, it’s your house, your land, and it really is up to you. I can only help you get the very best price for your house when you decide the time is right for you.

However, there are market factors, right now, that indicate that it is a good time to go to the market. Let’s look at the evidence on a national basis, locally and how it might affect you, today.

After two years of the ball being very firmly in the buyers court, real estate commentator  Alistair Helm of realestate.co.nz says the market is stable and swinging towards a sellers market, but there is a real danger of lack of stock driving up prices. The NZ Property Report, dated 1 Sept 2009, shows a clear lack of houses on the market, especially in the main centres. Auckland is the worst off, there are 45% (almost half) the number of homes on the market as there were a year ago. And this shortage of property for sale will drive up prices. One of the really scary things is that there are few homes being built, and little land being subdivided. Watch out!

Yet Auckland is New Zealand’s biggest city and the landing pad for most immigrants and returning ex pats. These buyers have cash and they are actively in the market buying homes with British Pounds and Chinese Yuan. Often this money is secured against overseas assets and borrowed with low interest rates. It is one of the reasons why the New Zealand Dollar is high. Overseas buyers have always valued New Zealand land and property highly, often higher than the locals ( think of British migrants in 1840, buying land from the locals for a few blankets!).  And while local interest rates are the lowest we have seen for decades, they are forecast to rise in the New Year, so buyers are buying and fixing their rates. Remember a loan in 2009 costs a third less than the same loan did a year ago.

So, locally, on the North Shore, there is a boom. How long will it last? I don’t know, you tell me. The auctions I have attended have been active and exciting. At 89 Forrest Hill Road, Forrest Hill about 200 people witnessed a battle royal. 3 bidders fought over an 1800m2 section with an original 1950’s weatherboard bungalow. It sold for $1,200,000. I have attached the bid sheet for you to see. 7 Trafalgar Road, Milford, a brick and tile 1960’s home, nicely renovated, with a pool, sold after a fiercely contested bidding war, for $900000. And 60 Kowhai Road, Mairangi Bay, sold for $855,000 3 weeks before the auction. The buyer made the sellers an offer they could not refuse, to avoid missing out (again).

Not every home is right for auction however, and some are more difficult to sell than others. If you are needing some advice, without bluff and bluster, call me.

Is now the right time to sell? The market evidence says YES.

Is it the right time for you? Only you can answer that.

If the answer is YES, give me a call on 0800618888.

Wasn’t it interesting that a week or so ago both the Prime Minister, Mr John Key and the Governor of the Reserve Bank, Mr Alan Bollard independently stated that they thought the worst of the recession was over. Perhaps we have had the major earthquake, and may yet still experience some after shocks. Staggering when months ago they were talking Armageddon and Great Depression.

Confidence has been evident in our real estate market for quite some time. We are noticing people coming back to the market in all areas. Investors are back buying investment property. fist home buyers have been back for a while.

Recently I attend the auction of a 1200m2 development site in Quebec Road in Milford. It sold for $803,000with very competitive bidding. This is an outstanding result and shows confidence in future demand and higher prices for homes. Auckland needs 21,000 new houses every year, yet over the last two years there have been few building permits issued, little subdivision and many builders have hung up their tools. Soon there will be demand for new homes and long lead times to build them. At Harcourts we are noticing a significant rise in section sales, see our CEO’s report here as builders prepare to start building again.

Immigration is on the rise, a huge number of Kiwis have been repatriating so very soon we will have a lack of housing stock. This is further pressure on the market and another reason for the fence sitting buyers to take action.

With lower prices, lower interest rates and an easing of banks terms and conditions there are many reasons to buy right now. It’s almost like a perfect storm, so what do you want to do? Buy or sell? Watch from the sidelines or get involved? Call me right away on Freephone 0800 61 88 88!

The Reserve Bank of New Zealand has just decided not to alter the Official Cash Rate. If you are borrowing right now it is unlikely you will see further big interest rate reductions, so while you can get money at 5.4% the banks are suggesting you fix that rate for the short to medium term.

Here’s the big banks’ forecast:

• ASB economists are sticking to their belief that the Reserve Bank (RBNZ) will cut the official cash rate (OCR) by 25 basis points in September and again in October, despite its views putting it squarely in the minority. Regardless of this, it believes there will be little impact on mortgage rates whether the RBNZ cuts or not.
• ANZ Market Focus is holding equally tightly to its view that the OCR is unlikely to see further cuts, suggesting there is only a one-in-five chance of an OCR fall. However, it suggests that should the RBNZ decide to cut, it is likely to be a 50 basis point reduction, rather than 25 basis points. It describes the interest rate curve as caught in a “tug-of-war” between global sentiment and the RBNZ’s “on-hold for longer” view.
• Westpac’s Weekly Commentary states that the RBNZ struck a “surprisingly dovish chord” in last week’s OCR review, suggesting it was more “downbeat” than June’s Monetary Policy Statement. There was no acknowledgement of the improving global outlook, or that domestic factors are “setting the stage for recovery”, it says.
• With much focus on the high NZ dollar in the RBNZ statement, Westpac’s central view is that if the market is overestimating the recovery’s strength, the NZ dollar will fall by itself; while if the market is right in its recovery assumptions then a strong NZ dollar will not be enough to negate that. It continues to believe that interest rates have bottomed and recommends fixing for six months to one year.
• When it comes to refixing most are recommending that short term is still the way to go.
• Best rate advertised this week 5.39%. Best quoted rate this week 5.30%.

For more information call Sue Isherwood or Craig Jones at Mortage Express on 0800 226 226.