September update | Economists call for RBNZ action as GDP slows
In case you haven’t heard, the latest GDP figures are officially out, and unfortunately they confirmed what many of us already suspected.
Talking to builders and business owners around the country, it’s clear that plenty are struggling, although I’ll caveat that by saying it does depend on where you are.
Off the back of that, it was good to see economists calling for the Reserve Bank to act decisively. Kiwibank’s chief economist Jarrod Kerr said “Enough is enough. Where monetary policy settings are today are clearly not enough” and is pushing for a 0.50% cut in October. Westpac has also shifted its forecast and sees room for a larger move. A half percent cut would certainly be a much-needed shot in the arm for the economy right now.
Interest rates dipping lower
TSB grabbed attention last week with a 4.49% two-year rate. It looks a bit like a marketing play as it’s the only change they’ve made, but it’s enough to get people talking. I’d expect fixed rates to keep trending down over the coming months. Test rates across the banks have also dropped significantly from the highs of around 9% and are now mostly under 7%. That’s made it easier for borrowers to get approved for a mortgage, and banks are clearly hungry for the business.
While the construction sector is still doing it tough, spring is starting to show small signs of life. We’re seeing clients take advantage of more favourable RBNZ rules for new builds, including exemptions on LVR (Loan-to-value ratio) and DTI (debt-to-income) rules, along with some sharper rates on offer. Add to that the recent cuts and lower fixed rates and first home buyers are perking up again.
What we’ve been up to
It’s also been a busy September at Colab. We’ve sorted funding for properties across the country: a house and land build for an investor in Wānaka, a turnkey purchase for a first home buyer in Franklin, and a new build purchase for an investor in Fletcher Living’s popular Park Green development. On top of that, it was great to connect with plenty of builders, industry partners and friends at the Auckland Home Show again this year.
TurnKey Pro Update
Our TurnKey Pro product continues to resonate strongly with builders around the country. Right now we are funding a pre-sold turnkey in Tauranga, a spec build in Christchurch, and another in the Waikato.
With interest rates edging down and no line fees, TurnKey Pro remains the most cost-effective dedicated turnkey product in the market. Builders are also getting creative with how they’re using it, which is great to see. If you’d like to chat about how to make turnkey funding work best for you, I’m always happy to jump on a call or catch up over coffee. Feel free to call me on 021 648 310 or email sam@colab.kiwi.
At Colab, we love guiding clients through the build process. Our collaborative approach means working with the client, builder, solicitor and the lender to keep everyone aligned and the process running smoothly.