So, Covid! Yes it’s still the big topic, the one thing that is having an impact on ALL of us in one way or another. With the news last week that there are live Covid cases in Christchurch, it all started to feel very close to home! We want you to know that we are avid tracer app scanners and mask wearers and are all vaccinated. Please remember that we are happy to do Zoom meetings and phone calls to support you if you are uncomfortable coming out, or if we go into Level 3 or 4.
We have our final workshop in the Finance Made Easy series this Thursday. The first 5 podcast episodes are on the website if you want to hear and share. Scroll down the Your Community page to find them. We have been running the series in collaboration with Plains FM.
We have had some great feedback and some requests for Elise to appear on some other Plains FM shows to talk more about finance.
With Lisa now on board we have been reviewing our systems and processes, and have been continuing to make adjustments help us achieve great results for you and speed up our response times for you.
The new Credit Contracts and Consumer Finance Act (CCCFA) changes that have been coming in is adding to the work required to do simple loan refixes, as the banks are now requiring more information from you. So, our aim is to start automating several of the steps involved in our finance application and review process, to make it much faster and easier for everyone involved. This will be specifically the exchange of documents, tracking the status of applications, signatures on forms and obtaining/submitting bank statements.
We have some new Terms of Engagement documents that we will be starting to send out that can be signed electronically. While COVID has helped to improve the ability for us to do more electronically and remotely there are still some forms and documents that must be signed physically. We will give you more information about the individual systems as we roll them out for use
Planning ahead for Summer Spending – whether that is Christmas or taking a holiday. It is very easy to overspend at the busiest and most social time of year! Putting aside a bit each week will spread some of that load – how nice would it be to head into the new year without a maxed-out credit card?! Putting aside around just $30 a week (about the cost of a coffee per day) will see you with around $220 at Christmas, enough for some tasty treats.
Inflation is on the rise, as are interest rates, so doing a little bit of shopping each pay towards the Christmas presents and Christmas supplies will also help. Also, remember that this time of year is about sharing time and making memories, not about going broke buying presents!
RNZ reported on a rise in requests for KiwiSaver withdrawals due to financial hardship, many to service vehicle loans and personal debt. KiwiSaver funds generally can’t be withdrawn to repay debt (with some exceptions, like in the case of bankruptcy) so many people have been denied access to their funds. This is because KiwiSaver is there for long-term investing – to help you buy your first home, or fund your retirement.
It’s a difficult time for many New Zealanders, particularly those in Auckland with the ongoing lockdowns having a huge impact on many people’s income and businesses. Accessing your KiwiSaver really should be a last resort, if you are considering this then please have a chat to us first. We will talk with you about other options for managing your debt.
We read recently that more than 1.2million KiwiSaver members didn’t invest in the scheme last financial year. This means that they will not have received the free money from the Government. What a missed opportunity! If you are unsure of where you are at with your KiwiSaver contributions, please ask us and we can help you to figure out how much you need to contribute before July next year to get the most benefit. Free money, why wouldn’t you?!
According to Brad Olsen, principal economist at Infometrics, The Reserve Bank may need to raise the official cash rate by 50 basis points to 1%, after annual inflation rose to almost 5% in the September quarter, putting inflation at almost 2% above the top of the Reserve Bank’s target band. The Reserve Bank is mandated by the Government to try to keep inflation “between 1 per cent and 3 per cent on average over the medium term.”
Olsen said the inflation figure – combined with a stronger-than-expected 2.8 per cent increase in GDP previously reported for the June quarter – put pressure on the Reserve Bank to consider its path forward.
The Reserve Bank is next due to review the OCR on November 24.
In other news, in a report released at the end of October, the RBNZ outlined its actions to mitigate and manage the economic risks associated with climate change.
“The financial stability risks associated with climate change are significant, necessitating an urgent and collaborative response. Our efforts at Te Pūtea Matua include ensuring our own house is in order, as well as working directly with our regulated institutions and domestic and global networks to best manage the climate transition.” – Reserve Bank Governor Adrian Orr.
Another announcement came in mid-October – the setting up of a Māori Bankers Rōpū (group). This group, known as Tāwhia, has been established to share ideas and deepen the understanding of key issues for Māori within the banking sector. The group includes representatives from many of the big banks.
“We’re proud to stand alongside other leaders from the banking industry, as they come together to help deliver and promote outcomes centred on Māori financial inclusion and wellbeing,” says Te Pūtea Matua Governor Adrian Orr.
“At Te Pūtea Matua, we recognise that Te Ao Māori is integral to Aotearoa New Zealand and we’re proud to support this Rōpū and its kaupapa (vision and opportunities).”
In Christchurch, city councillors are considering whether to continue with a rebate scheme set up in 2013 to encourage new builds in the central city after the earthquakes. So far over 1300 homes have been built under the scheme, which offers a partial rebate on the CCC Development Levy. A report from council staff says the real estate sales boom and price rises means the development contribution charge is a very low barrier to development “The central city residential development sector appears to have strong momentum without the need for ongoing rebates to de-risk or incentivise new development.’’
With the recent announcement that 165,000 temporary visa holders are soon to have their permanent residency confirmed, many will be looking to purchase homes. Preparation for many has been underway for a long time as they wait for that magic certificate, and they have the resources available now. This will continue to drive the demand for property and while some investors are having issues with finance, the property market is unlikely to cool.
Last week we heard about a law change that will allow landowners in Auckland, Hamilton, Wellington, and Christchurch to build up to three storeys without resource consent. The Government and National have jointly announced a new bill that will allow for more dense housing in cities. This is going to fuel the development market and drive up the price on properties with the ability to take advantage of this new rule. The new rules take effect in August 2023.
Banks and Finance
Inflation is tracking higher than expected. The OCR was certainly expected to move upwards, and this may be accelerated to try and combat the effects of inflation. Talk to us about your rates and your plans… it’s a very good idea to lock in some good rates if that works for your situation.
Most one-year interest rates now above 3% and the 5 year rates are all heading to over 5%.
An update from us.
Lisa is on board and learning the ropes and has already made a significant contribution to the team in making progress on some of our systems. Elise has her reno property on the market (check it out here) and is happy to be back and fully focussed on her work with you all.
Eroica had a wee jaunt down to Dunedin for a much needed holiday and feels very lucky to have got away, as so many kiwis don’t have that luxury at the moment.
Elise is also back completing her studies so she can extend her services to you and continue to access the latest information to keep you on track for your financial goals.
We look forward to hearing from you if there is anything we can help you with and do keep an eye on our Facebook and blog for useful information and tips.
Until next time,
Elise and the Team