Juggling your investment options with another OCR freeze
In this COVID world a lot can change within a day, like it did on Tuesday the 17th of August. But while we all focused on the snap lockdown, there was one knock on effect that impacts New Zealand investors and borrowers.
For most, the Reserve Bank’s decision to hold the official cash rate came as a surprise. According to the Reserve Bank the decision had been made for now, “in the context of the Government’s imposition of level 4 Covid restrictions across New Zealand”.
After years of bank interest rates at generational lows, they have been starting to rise a little. But even before the decision to hold the official cash rate this week, bank economists were admitting that these small increases will not keep up with inflation in the next year. It means the value of savers’ money will likely erode in real terms.
We think this is one of the drivers behind the level of enquiries we’ve been getting from investors at Southern Cross Partners.
The lending side of our business has been working hard to find high-quality loans for our investors and as a result we’ve been able to open our wait list for investors.
Offering investments backed by a tangible security – property.
We run a specialist lending division that finds high quality lending opportunities. When a loan application passes internal approval processes, Southern Cross Partners lends its own money to the property owner and then we put it up on our investment portal for you to invest in.
When we look at loan applications, we’re always thinking about what our investors would like to invest in. As a specialist lender, we pick up where the banks give up.
There are no impersonal algorithms here. Instead we put faces to numbers and people at the heart of everything we do.
We take the time to get to know the people we’re lending to and understand individual circumstances. The vast majority of our loan applications come through advisors we’ve worked with before.
When mortgage advisors bring us loan applications, we look at four main things:
- A clear exit. We need to know how a person is going exit their loan with us, at a set time. Ultimately, it’s about making sure people can repay their loans at the end of their lending term.
- Realistic repayments. We’re looking to see if the person taking out the loan can easily make their repayments with us.
- Loan to value ratio. The difference between what a property is valued at and how much we are lending gives us a buffer in case the property needs to be sold unexpectedly. So this is a crucial element we assess for and we tend to be more conservative than the banks on this front.
- There are a few ways we can value a property. Sometimes we’ll have an independent valuer involved and other times we’ve got enough data from the sale of similar properties. But what’s most important is that we can explain to our investors how we decided on the valuation.
Taking into consideration people’s unique situations is at the heart of what we do and gives us the ability to find quality loans that turn into quality investment opportunities.
If you are interested in finding out more about investing with Southern Cross visit - www.southerncrosspartners.co.nz/investments/ or call 0800 00 58 43
