You all know what is happening, media and social media is all over it and Covid-19 is all that some people are talking about. It is important that we do talk about it to keep ourselves and each other safe, as well as being able to process the trauma caused by the lockdown. Job losses, business impact or the simple requirement of being restricted to home all have an effect on us.
Covid-19 has impacted us all, and as always it will be our choices and responses that will get us through this crisis. There is a saying “things are neither good or bad, thinking makes it so”, and so it will be our thinking and actions that will create the opportunity to eliminate Covid-19 from within our community and help get ourselves and our economy back up and running.
Take a look at your spending plan and making sure you are making conscious decisions about how and where you spend your money. Make sure you are spending less than you are earning, and if you have the opportunity to spend locally, then do so. Look out to see if you can support the small businesses, especially those with premises that have been closed. If we want to have options and variety into the future we will need to look after these small businesses who have been hit hard by the lock-down. Many have high overheads in the form commercial rents and will really appreciate our support in level 3 as they get back on their feet after this set back.
If you are struggling with your rent, talk to your landlord. If you are struggling with your mortgage, talk to your bank. Don’t wait to miss payments before talking to someone. If you’re not sure what to say, have a chat with us and we’ll help you to figure this out.
As part of keeping up to date with what is happening in the financial markets and talking to other advisers and the various experts in connected industries, I was reminded that “it is often those that don’t reach out that really need the help”. Please do book a call back if you are feeling stressed about your finances, we will do what we can to help you through this!
Many portfolios are still down after the big drops is March, however the bounce back has been significant. A drop in value in your KiwiSaver today should not be a concern if you don’t need the funds soon for living off in retirement or to use for a first home deposit. Your funds will recover and grow. If you are able to continue to contribute to your KiwiSaver, the new contributions will be buying into the markets are bargain prices and as the markets continue to recover your funds will grow accordingly.
There is a lot of speculation around the property market. With international travel stopped for the medium or long term, there may be a number of AirBnB properties that are changed from short term rentals to long term rentals, or sold. As banks have given property owners a grace period to sort out their finance, there will be no hurry for these properties to be sold. This means that it is unlikely that there will be a flood of property on the market which could drive the property values down. There is no reason to expect a drop in property values as there is already an undersupply of properties, even with some AirBnB properties being converted to long term rentals or sold.
The Reserve Bank of NZ has provided relief through the banks by removing some restrictions and allowing Banks to offer home owners to switch their loans to interest only, or to offer a loan payment deferment. These are both good tools to help you get through a shortfall in cashflow, AND… while they are great tools they do come at a cost and you, not the banks, will pay for the opportunity.
Should property values drop, the banks will need to discuss the levels of equity in your property, and your level of debt. With this in mind the RBNZ is looking to remove or reduce the LVR restrictions which will enable investors to get into the market again.
Banks and Finance
If you have existing debt with banks and finance companies, they have a duty of care to ensure that you can continue to service that debt and support you to be able to repay it. If you have concerns about being about to repay it, talk to us and we can have those difficult conversations on your behalf and often talk through options you were not aware of.
With regards getting new debt, increasing limits, or credit for new purchases – the credit companies and banks are asking more questions about your income and the industry / business that you are working within. Without that income, your ability to service your household and any new debt will be compromised. The lenders only get to ask these questions before you draw down the debt so expect them to be asking lots of questions about your ability to service the loan if your income changes.
It’s also worth noting that hardship applications, such as requesting payment deferments or switching loans to interest only are being registered on your credit score and can affect your ability to get finance in the future.
We all know that insurance is a means for transferring your risk to another company, and is a strategy to ensure that you protect your things, income and lifestyle in the event that something happens.
When your income is impacted or reduced the temptation is to reduce or stop your insurance. There may be longer term implications with doing this, if you cancel your policy and it doesn’t have any exclusions you will need to reapply and your new cover will be underwritten and you could then have exclusions on your policy.
Talk to us about your best approach, as insurance companies are also working with people to keep them protected.
What’s happening at Building on Basics, and with Elise
In the last few weeks we have been working closely with many of you, to help you navigate through the lockdown and the implications it has for you. We have also been working on building our team to further improve the service and support that we can offer. We are excited to be able to introduce and welcome Janneke Doller. Janneke is going to be working in a client service role, to support Elise to deliver the best results for you. Don’t be surprised if you get a call from Janneke in the future.
On a personal front Elise has been completed her some outstanding study and has been enjoying the lock down as a time to reflect on personal and business objectives. Monday saw the conservatory roof exit the bubble before lock down was over. In Lyttelton we had super strong winds and a panel in the conservatory roof blew out. Elise and Sarah did a quick job of getting that replaced with a temporary cover and sealed prior to some rain coming through. Clearly the roof didn’t read the memo to say that it was not time to exit the bubble.
So whatever life throws at us, we are sure you will deal with it. On an individual basis and as whanau, community and a nation we have shown the love and support that is available to deal with Covid-19 and anything else that life can throw at us. Life is a journey, take the time to pause and enjoy the good things as we move out of the various stages of lockdown. You know how to get hold of us if we can help.