With so many public holidays April seemed to go by very quickly!
Great if you needed a break and were able to take advantage of taking leave for the interim days and combined the two short weeks. Elise took time to head away for a long weekend to and celebrated a friend’s 50th birthday. We hope you too managed to get some down time.
In this newsletter we are going to talk about:
Summary of April blogs
Property
KiwiSaver
Banks
Reserve bank
Hot tip of the month
First Home Buyer Tips
Did you know…
MBIE finally released the details of the proposed changes to CCCFA. The amendments are small but significant. In basic terms the Lenders can go back to using common sense by accepting a borrowers estimate of their commitments. See the proposed changes here
Inflation has hit a 30yr high of 6.9%, and in my view I can’t see a reason for it to stop going up, which is a very scary thought. Businesses are struggling to find the appropriate skilled staff, supply chain challenges continue, and the temporary tax relief on the fuel tax is due to come off in the coming months.
This affects us all, and if you are struggling with what to do and how to brace for what is coming get in touch.
We didn’t post as many blogs as usual in April, but there are more on the website!
In this newsletter we are going to talk about:
Summary of April blogs
Property
KiwiSaver
Banks
Reserve bank
Hot tip of the month
First Home Buyer Tips
Did you know…
MBIE finally released the details of the proposed changes to CCCFA. The amendments are small but significant. In basic terms the Lenders can go back to using common sense by accepting a borrowers estimate of their commitments. See the proposed changes here
Inflation has hit a 30yr high of 6.9%, and in my view I can’t see a reason for it to stop going up, which is a very scary thought. Businesses are struggling to find the appropriate skilled staff, supply chain challenges continue, and the temporary tax relief on the fuel tax is due to come off in the coming months.
This affects us all, and if you are struggling with what to do and how to brace for what is coming get in touch.
We didn’t post as many blogs as usual in April, but there are more on the website!
Which debt should I pay off first?
Sometimes we find ourselves with multiple debts, and in this blog we go into what to pay off first to make the most of your money.
Hot tip of the month
Work out how much you need to insure your house for!
Construction costs have been increasing as materials for building are in short supply. This means that the value of the replacement cost for your home has increased. When you insure your property you need to account for the section to be cleared for a rebuild, not just the cost of the rebuild. Use the Cordell Sum Sure Calculator to see how much you need to have your property insured for.
Did you know?
Buy Now Pay Later (BNPL)systems like Afterpay and ZIP are useful if you have cashflow issues and cannot afford to pay for the transaction in one lump and need the item now! The key phrase is ‘need’. If you have a Buy Now Pay Later system and you are applying for finance the banks reduce the amount of lending you can have. If you use a BNPL tool the banks assume that you are not able to save for items that you want, and often relate this to compulsive spending. Under the current CCCFA rules it does not help your case to maximise your lending, and the revised changes will not change this. Best to avoid using BNPL systems unless you are really stuck – and please talk to us first, as there are often better options.
First Home Buyer Tips
Buying your first home can be an overwhelming process. This is our new tips section to help you get into your own home.
What do I need to know about past insurance claims?
If you buy a property that has past insurance claims and in particular EQC claims then both your new insurer and the bank will want to know that the repairs have been completed. You will need to supply any damage assessment reports and evidence of the repairs being completed. This can be with invoices for the completion of the work or signoff documents, PS3 and PS4 docs if applicable.
Where the EQC repairs have not been completed to a good standard or have not been completed at all, there is the possibility that the claim can be reopened and EQC may pay out for the remediation work to be completed.
As long as the issues do not relate to the foundations, weather tightness or structural issues then the bank or lender is likely to provide finance.
Have a read of the First Home Buyer section on our website too.
KiwiSaver
The share markets continue to be volatile. Supply chain issues continuing and the war in Ukraine are two of the key reason that the various Global share markets continue to adjust. As a result of this KiwiSaver funds continue to fluctuate. Unless you are needing to use the funds in the next 5-10 years you are best to leave your funds as they are.
Removing your money from a fund when the unit value is low will mean that you realise (lock in!) the loss of value of your KiwiSaver, if you leave your funds where they are they will increase in time. If you are unsure what you should be doing or are nervous about your savings get in touch, we would be very happy to talk you through your best approach.
It wouldn’t be a KiwiSaver update without us mentioning how many months off the Government Contribution date we are… TWO! Make sure you have put enough into your KiwiSaver to receive the full free allocation of $521.43 – please contact us if you would like some help accessing your KiwiSaver account.
Reserve Bank
The RBNZ increased the OCR by 0.5% on 13 April and it is anticipated by many economic commentators that they will do a further increase of 0.5% in May. Back in December we commented that the expectation was for the OCR to be at 2% by the end of 2022 and it seems that with inflation bolting this will come far sooner than we all expected.
Banks
The banks have been anticipating the Reserve Banks increase of the OCR and have been increasing their interest rates both before the announcement on 13 April and after.
The indications from the banks are that they will continue to increase both the short and long term rates as a way to combat the increasing inflation and in anticipation of the increasing OCR. With the announcement of the proposed CCCFA rule changes some of the banks are softening their approach, but it is a bit arbitrary and is being looked at on a case by case basis based on the risk of the entire deal not just your ability to service the debt.
The loan structure is now more critical than the interest rate, and being matched with the best bank to suit your needs is more important than ever now that we are paying higher interest rates.
Property
Properties are taking longer to sell and many continue to be turned in at Auction, which should mean that it is easier to get into the market if you have everything lined up and ready to go.
A good property will still sell and get a fair value. The recent drops in property values have taken the property values back to July 2021 levels.
As the market moves more into a buyer’s market if there are any issues with the condition of a property the banks will either decrease the level of lending regardless of your ability to make the loan payments or reject the property outright. Having a plan and funds to rectify any issues is the way around this, assuming you can get insurance.
We are always available for a chat about your situation. Book a meeting at the Calendly link, or send us an email.
Until next time,
Elise and the Team