Hi [salutation],

The cooling economy appears to be the main theme of our economy at present, although I have yet to see this translate to the homeloan market- all of our lenders are reporting strong volumes, and we are coming off a very strong start to the year ourselves. However the doomsayers appear determined to talk the economy down despite its remarkable resistance to date...

Although it is still early days it appears that the cooling economy has finally resulted in the end of this cycle of rate rises. Despite the Reserve Banks claim that there is unlikely to be any easing in the OCR this year the markets are taking a 'liar, liar pants on fire' approach and pricing in the first rate cut for October. My view is that although the anecdotal evidence appears to suggest that the economy is cooling at a pretty decent rate, rising interest rates in both the US and Japan will result in a pretty hefty drop in our exchange rate over the coming months. This will likely have the effect of 'importing' inflation as businesses raise prices to preserve their margins- the net effect being that there is unlikely to be much scope for rate cuts, given that we already at the top of the inflation band and likely to stay there for the foreseeable future.

Mixed signals from the housing market at present meaning that the best is probably behind us, but that strong fundamentals remain. It is hard to see much downside while employment remains at these levels and interest rates remain at what are pretty reasonable levels historically speaking. Interesting to note that residential building consents are now well down on a year ago and the trend is to soften further. Might be a good time for those of you who have been thinking about a renovation to look at using the equity in your property for a new kitchen or a swimming pool. You might actually be able to get a builder, and he should cost you less than $50/ hour (Auckland) and $40/ hour everywhere else!

To once again demonstrate our committment to our customers I have foolishly put my money where my mouth is, and promised anyone who will listen, that if they settle a loan with us, and they are not happy with the service we provide, I will pay them $500. Offer valid for all loans settling before May 31st.
That is the APM Service Guarantee...

I would like to welcome this month Mark McDonald who will service the West Auckland area. Mark has previous finance experience and will prove to be a welcome addition to our team in Auckland which now numbers six.

I am pleased to report that competition in the lending market appears to have reignited following a somewhat insipid end to 2005. One lender, who shall remain nameless, has even sent a letter out stating that they are very keen to have a look at all new business, and are happy for our brokers to name the price that they need to meet to get it! From a consumer perspective it doesn't get to look much better than that. Given the above state of affairs now is probably not a bad time, for anyone who is due to come off a fixed rate before July, to let our guys have a look at pricing up a re fix. It is unlikely that the current state of affairs will last too much longer. By my calculations margins in the Low Doc segment are down to about .8ish% and in the prime sector (Big Banks) to about .7-.8% meaning that nobody is making very much money! Ideal conditions if you are a consumer. 

Those of you who are self employed will be pleased to see the curent trend towards low doc loans. These enable self employed people to certify their income by signing a declaration, rather than have to provide financial statements to prove it. In lay mans terms its a 'we'll take your word for it approach'. The other good news is that these products are now available at prime rates and are offered by a number of the major banks as well. All of which begs the question as to why you wouldn't low doc it- unless you enjoy ther drama of trying to prove your income! If you need a hand, or need more info on how to get a low doc loan give us a call on 0800 800 067. 

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