2020 is 5 months down and we can safely say this year has been like no other so far, and there is still a lot of uncertainty ahead for all of us. We are now in Alert Level 2 and things are progressing well from a virus management perspective. Almost everyone is looking forward to Level 1, and more freedom, as well as the opening of the borders.
Businesses are beginning to reopen, some under strict limitations. There are many businesses that will not reopen, and others that will be changed. The economics of a business failing is far reaching: the loss of jobs; suppliers and creditors potentially out of pocket; and the business owners with personal guarantees and debts to repay. The loss of businesses and jobs has a ow on effect for other businesses and households as well as the unseen health and well being of those both directly and indirectly affected. Unemployment is expected to reach 10% within the next 6 months.
Should you be in a situation where you have lost your business, or your job, the critical thing to remember and be aware of is that you are not alone. Knowing you are one of many is not going to feel like any form of comfort. However, there are some good things that have come out of the pandemic. One of my favourite things is the way that people are pulling together to support each other. It is not only friends and family that are pulling together, businesses are working together to create opportunities for other businesses and people affected.
There are a large number of government and community initiatives that are there to support. There is no shame in asking for help, and asking could be the difference to surviving today and recovering faster than if we go it alone.
Government initiatives like the Wages Subsidy, IRD Small Business Cash Scheme (Loan), Wage Subsidy Extension, banking business loans that are government backed, Income Relief Payments, Loan repayment deferments, and switching loans to interest only, are just a few of the many initiatives that are available.
One of the biggest risks for people and families is to try and go it alone and deal with the impact of the pandemic by yourself. If your household income is reduced for whatever reason, then you need to work out a new plan. Ignoring the situation will only create bigger problems down the road, and potentially the effects could be long lasting.
Please reach out if you want to talk through your situation and need help with creating a plan or identifying your options.
June is the month to check you have contributed at least $1042.86 to your KiwiSaver to ensure that you receive the maximum Government Contribution of $521.43. If you need help to check out if you have made the minimum contribution, let us know.
There is a lot of speculation about the property market. Prior to the pandemic there were insufficient houses available and the requirement to increase the number of builds dominated the media. With the borders closed even temporarily some of the short term rentals used for AirBnB and the like are being converted to long term rentals. This will have an impact on rents as the supply of rentals increases. Areas with high dependency on international tourism will likely see a drop in value.
Tourism is one factor that will affect the property values, the other major impact will be
people’s ability to afford their mortgage. If your ability to afford your mortgage has been affected talk to us to ensure you have a plan to avoid a mortgagee sale. There are options.
The Reserve Bank of New Zealand has indicated that the OCR rate will remain positive until at least Jan 2021, as the Banks are not ready for the negative rate. The banks will need to review their internal systems to ensure that they can cope with the negative rates.
Banks and Finance
The Loan to Value Ratio restrictions have been removed until May 2021, and the banks are reviewing mortgage interest rates. The rates for loans are continuing to drop. BNZ was one of the last to drop their 1 year rate to below 3%, and one of the first to set their 5 year rate to less than 3%.
Low rates will create opportunities for many, and the banks are looking your ability to service the loans in the long term and are asking questions about incomes to ensure your ability to pay the debt for the full term of the loan.
To finish up
Janneke has joined the team and has been settling in and getting Elise sorted. Elise has completed her Level 5 – Financial Services Certification. Eroica has been working on website content – we look forward to showing you our beautiful new site soon. We’ve all been enjoying a return to some of the freedoms of “normal” life, with the opportunity to catch up with friends face to face, especially when a good coffee is involved!
Until next time, take care of yourselves and your loved ones, and support local businesses where you can.
You know how to get hold of us if we can help. Kind regards,