September Insight with Mike Newdick

21 Sep, 2023


September Insight with Mike Newdick

Welcome to our latest newsletter.

Currently, the media and indeed many conversations that occur over a flat white [or a glass of wine] seem to be dominated by the politics generated by the forthcoming election. In all my years [and they are adding up], I cannot recall such a politicised environment in New Zealand.

At the time of writing, National have extended their lead in the polls from a nose to a neck in front. However, the minor parties are jostling for position.

We have seen the usual slowdown in activity in the four to six weeks leading up to a general election. This may be compounded by the fact that many people have departed overseas for a vacation or to follow the Rugby World Cup in France.

One of the current and continuing issues that we have seen facing borrowers is the bank’s growing insistence, as loans come up for renewal, to require borrowers to move from interest-only loans to principal and interest loans, which, compounded with higher interest rates, is placing continuing and increasing pressure on borrowers. For these borrowers, Endow is considered an attractive option, given its advances are on interest-only basis.

 We have begun experiencing significant inquiry from the Christchurch region, and in a recent reconnaissance to the South Island, the writer was impressed by the level of activity there.

When assessing loan proposals, it is of critical importance that a valuation accompanies the application. There are several different methodologies a valuer may use when assessing the value of a property, and it is important that the correct approach is adopted for the particular property in question. In conjunction with a registered valuation, Endow also likes to conduct its own reviews and market research with reputable local real estate agents to fully understand any local market nuances that may not be accounted for in the valuation. Finally, a sight inspection is carried out to physically view the property, which is offered as security. In a later blog, we will offer more detailed commentary on the different valuation methodologies registered valuers can adopt.

It will be interesting to see the market reaction to the election results, particularly if we have a change of government. Reduction in non-core spending which is likely to follow a change of government, may help reduce inflation, as well as, the well-publicised China slowdown, which appears to have rapidly made its presence felt in the reduction of dairy returns experienced by our farming communities.

 A crystal ball would certainly be helpful right now.

Best wishes to you and your family, Mike.