Smart Moves in Finance: What You Need to Know This Month

Welcome to the new edition of FloWealth monthly blog! We’re here to break down key financial insights, lending trends, and market updates – all served with a dash of wit and a whole lot of useful info. Whether you’re dreaming of your first home, eyeing that commercial property, or gearing up to expand your business, we’ve got you covered. Let’s dive in!

What’s Happening in the Lending World?

Home Loan Interest Rates: Any Signs of Relief?

If you’ve been keeping an eye on mortgage rates, you’re probably excited to see that they’re on a downward trend ↓, thanks to controlled inflation and a stable economic outlook. Recent signals from major banks and the Reserve Bank suggest that rates will continue to drop – creating a more favourable environment for borrowers.

Experts are noting that over the next six months, as around half of all mortgages come up for refixing, now might be a great time to act. Say if you locked in your rate a couple of years ago, you might see a drop of over 150 basis points when you next refix. An option of splitting your loan between short- and long-term fixed rates to lock in these lower rates while keeping some flexibility for future moves might seem like a smart move. Do keep in mind that everyone’s financial goals and needs are different, seeking professional mortgage advice before taking any action is highly recommended.

Key Takeaway: If your mortgage is up for renewal, seize the opportunity to secure a lower rate and enjoy some breathing room in your budget!

NZ Business & Finance News: What’s Trending?

Good news on the consumer side – Westpac’s latest Retail Spending Pulse shows a 3.7% annual rise in spending on credit and debit cards. Groceries are up by 5%, and homeware spending has jumped by 7.1%. Although some categories like clothing and furniture have dipped slightly, this bounce-back signals growing consumer confidence after a challenging 2024.

For young professionals and budding entrepreneurs, these trends might translate into a more dynamic market, opening opportunities for savvy investments and smart borrowing decisions.

Industry Shake-Up: Leadership Changes

In a surprising twist, Adrian Orr’s sudden resignation from his role has stirred the industry. While change can feel a bit unsettling, it often paves the way for fresh perspectives and new opportunities. Acting Governor Christian Hawkesby has stepped in for now, and the quest for a temporary governor is underway. Keep an eye on these shifts – they could signal exciting new directions in New Zealand’s financial landscape!

Top Tip: Loan Applications – Watch Your DTI!

Planning your loan application? Here’s something to keep in mind: New Debt-to-Income (DTI) restrictions are shaping the lending environment.

• For Owner-Occupier Loans: Borrowing is considered high-DTI if it exceeds 6 times your gross annual income (minus any existing debt).
• For Investment Loans: The threshold is 7 times your gross income.

These “speed limits” mean that only 20% of new lending may go towards borrowers who exceed these ratios. While certain loans like Kāinga Ora, refinancing (if the loan value remains unchanged), bridging finance, and some construction loans are exempt, it’s smart to know where you stand. Keeping your DTI in check can help you structure a stronger loan application and boost your chances of approval.

Key Takeaway: Understanding your DTI is key – stay savvy about your numbers to navigate the borrowing process with confidence!

What’s Next?

That’s a wrap for our March edition of the FloWealth Monthly Blog! We hope these insights empower you to make smart, informed financial moves. If you are thinking about your next big step – whether it’s purchasing your first home, securing a commercial property, or exploring business lending options – we’re here to help.

Ready to chat about your finance options?

Drop us a message or give us a call, and let’s discuss how you can turn today’s market opportunities into tomorrow’s success.

Stay smart, stay informed, and we’ll see you next month!

Cheers,
 FloWealth Team

Disclaimer: We recommend seeking personalized professional advice from your trusted advisor before taking any action, as each applicant’s situation may vary. The above content is for general commentary only.