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BNZ is the next to move their mortgage rate card up sharply, maintaining a small discount to ANZ for the key 2-year fixed offer. BNZ also raised their term deposit rates

Personal Finance / analysis
BNZ is the next to move their mortgage rate card up sharply, maintaining a small discount to ANZ for the key 2-year fixed offer. BNZ also raised their term deposit rates
[updated]
Home loan rates rising
Source: 123rf.com Copyright: eamesbot

BNZ is the next major bank to raise home loan interest rates sharply. Update: Westpac has raised all its fixed rates by +50 bps.

They follow ANZ's lead.

But the BNZ levels are pitched slightly lower than the equivalent ANZ rates, especially for the key two year fixed term. 

BNZ's new 12, 18 and 24 month fixed rates are all up +50 bps. Their 3 year is up +34 bps, and the four and five year fixed terms are up +20 bps.

This flatter pattern reflects recent wholesale rate changes.

These changes are all effective Wednesday.

But it has to be noted that wholesale rates have not been rising since the run-up that ended on June 16, last Thursday. Since then, wholesale rates have actually slipped a little. Today (Wednesday) however, the benchmark US Treasury rates rose sharply again and that signal is very likely to resonate in local swap markets later in our trading session.

BNZ also announced equivalent term deposit rate increases at the same time. And that incudes an equivalent +50 bps hikes for one year as well.

It is reasonable to expect the other mortgage majors - ASB, Kiwibank and Westpac - will be along soon with their own sharp rate increases.

As BNZ did, they all have room to pitch their new rates below the ANZ's levels even as they raise their own rate cards.

One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at June 22, 2022 % % % % % % %
               
ANZ 5.35 5.35 5.65 5.80 5.99 6.85 6.95
ASB 4.95 4.85 5.09 5.35 5.65 6.35 6.45
4.99
+0.30
5.35
+0.50
5.59
+0.50
5.69
+0.50
5.99
+0.34
6.09
+0.20
6.19
+0.20
Kiwibank 5.10 4.85   5.19 5.39 5.55 5.79
Westpac 5.35
+0.50
5.35
+0.50
5.59
+0.50
5.69
+0.50
5.99
+0.50
6.29
+0.50
6.39
+0.50
               
Bank of China    4.65 4.95 5.25 5.55 5.85 6.00
China Construction Bank 4.35 4.45 4.85 5.19 5.45 6.15 6.35
Co-operative Bank 4.85 4.85 5.15 5.35 5.65 6.35 6.45
Heartland Bank   4.40   4.90 5.10    
HSBC 4.79 4.69 5.04 5.29 5.54 5.94 6.04
ICBC  4.39 4.45 4.85 5.09 5.45 5.69 5.89
  SBS Bank 4.65 4.55 4.89 5.19 5.39 5.79 5.95
  4.45 4.34 4.90 4.99 5.35 5.55 5.75

 

Fixed mortgage rates

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Daily swap rates

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Comprehensive Mortgage Calculator

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71 Comments

Landlord in 2020: 

"Get your tenants to pay your mortgage.   When you retire you will own a freehold asset and your tenant will still be a sad poor.   Get ahead."

Landlord in 2021:

"The RBNZ has our backs.  They will never let house prices fall."

Landlord in 2022: 

"Waaaahhh!  Mummy!"

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37

2020: Buy a do-er upper, renovate it, and sell within 2 years and use the built up equity to get your dream home.

2022: Home buyers should be buying homes with a view to hold for the long term, 20 years or more.

Public opinion on housing changes much faster than the illiquid property market could ever hope to.

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8

Almost every day the housing market has more bad news the crash is inevitable just how deep will it go.

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5

"Waaaahhh!  Mummy!"

Really?  That's your best contribution to Interest?

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13

If you don't like a comment you can ignore it and move on.

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25

Or I can also point out how childish it is… 

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Hi Yvil, did my post hit a nerve?

The 2020 & 2021 comments were pretty accurate though, right?    A snapshot of the zeitgeist of those times.    

Many, many posts have been made in this forum along those lines.     The Waaaaa Mummy! posts are yet to come.   

2020: privilege

2021: privilege

2022: panic.

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No your post did not hit a nerve, it just hit a new low on the scale of childish comments

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Have you met my friend satire? It's a bit of a weird thing to get all upset over. 

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36x likes.......the crowd calls it a winner and somewhat on the money.

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Indeed NZGecko, although your term "money" is misplaced.  The "crowd" is not wealthy, a large number of likes is a sure sign of poor (in the literal sense) thinking.

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what a muppet. 

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Actually it made me smile. 

Better than the "be quick!" story no?

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Come on! Yvil! Life is short, people gonna have some fun sometime! Why so serious? It's just a joke! 

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Fair enough, I just thought it was incredibly immature on a financial site, probably better suited to trashier site

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But people were making fun of DGM too back then? I didn't see you were bothered and commented "immature" "trashier"?

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Because I never read comments like "Waaaahhh!  Mummy!" made towards people you call DGM

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I've read hundreds of comments that make fun of renters.

...They will be poor forever.  They will retire with no assets.  They are not smart enough to leverage up.  Never rent a house to someone on a benefit.  If they want a pet they should just buy a house.  I'll just keep raising the rent to cover increased tax/interest costs.  Their work will fund my retirement [because I am smarter/more worthy].  Get stuff done. Let them eat cake...

Now it is time to make fun of overleveraged landlords.   Waaaah waaa!  Mummy! 

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You're correct ... "Waaaahhh! Mummy!" is far politer than many of the comments directed at people who were worried the market would burst. 

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And what's happening right now in the world approved that those worries do make sense. 

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What do you guys think will happen price wise for holiday spots like whangamata.there has been a slight uptick of listings but prices seem to be holding up.will places like these be the last to de value?

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As long as boomers continue to exit their rot boxes with million in capital gains I think Whanga's crazy premiums are safe. They have gotta spend it on something.

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Yvil this comment is your normal response then the odd rattle and dummy tossed out of cot.

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I wish I could describe myself as something other than a landlord, just to dissociate from the popular image.

I have one rental, owned for nearly 20 years, which is viable as a standalone venture (income > outgoings, and yes tax is paid), and I regularly maintain it to keep it attractive to current and future tenants. I have always kept well ahead of minimum requirements with insulation all round, a ventilation system, over-spec heat pump, extra panel heaters, and I'm currently working through retrofitting double glazing on all windows. The house is very warm and dry, and we have just agreed to the tenant getting a dog.

I enjoy staying there between tenants to do any R&M as it's a much (much) more pleasant environment than my own house. It's almost like being on holiday. I don't live in the same city but I have a number of reliable, professional tradies I have used for many years who can attend to any issue sin my absence in a timely manner.

The payoff is that I can command a higher rent for a quality property, and there is always a number of excellent tenants from which to choose when the time comes. Tenants are my customers, I recognise they are paying a handsome amount of their money for my property and my service, and I expect myself to provide a quality experience in return.

I know I could sell the place and buy a few slums in exchange, load up on interest-only, and live just this side of a Tenancy Tribunal decision while gouging WINZ for all it's worth, but I sure sleep well at night. I won't ever be "rich", but "comfortable" is good enough.

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The 'not loading up on interest only' will be what sets you apart, just wait. Soon we will find out who was swimming naked.

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Refreshing to read.

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well for all the negativity some people heap on comments on this page, I'm glad I read and listened to a few and locked in at 2.8 for three years last year. Looking better by the day.

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Until it comes time to re-fix. 

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If you are in it for the long game it makes no difference.  What is happening now is total mismanagement by central bankers and government. Quickly lowering and then quickly hiking is like a trap.  If the hikes carry on then comes the crash and knock on effect recession and then job losses.  Then comes stimulus and the whole cycle repeats. 

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Which is why I chose to fix 5 years.  Kick that can as far down the road as I can, and hope at the end of the tunnel that any payrises result in an extra above the new payments.  

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If there is any ability to put a lump sum on that loan every year, then do the sums on that v keeping any savings in cash.

We were on the other side of the curve when we bought our home, i.e. interest rates were falling. But every year I paid the maximum 5% lump sum we were allowed to without penalty. Helped a lot.

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You can still generally make payments of up to 5% balance owing, which I do when annual bonuses come around.   

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Yep, in the meantime there will be pay rises, a good chunk of the principal paid off, and quite likely lower rates again by then.

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na basically done and dusted by then. happy days

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Three years isn't very long for such a long duration loan. NZ is a very risky market without the ability to fix for the length of the loan like in the US. Kinda crazy that they let you borrow so much without knowing how much interest you'll pay.

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Whenever I see these rates go up like this I think back to the negative interest rate narrative of 2020 and the many who jumped into the market taking on extraordinary amounts of debt during the last few years. A lot of people who were earning peanuts on their term deposits also put their money into the property market looking for a return. It has been crazy to watch such a rapid turn around in events. 

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All it means in the end is no one knows what they are doing or what is going to happen. I've said it before - things change.  

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nothing will change the fact that property is the safest and most lucrative investment option in NZ.

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Higher interest rates seem to be changing that fact pretty rapidly.

It remains to be seen whether property is a lucrative investment in an environment where rates are static or rising.

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TUI

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You are more than welcome to put as much money as you want in it, it's your money.

The most lucrative and safest investment option is supposed to be (and in a sense still is) working on your skillset and helping kids to improve theirs. 

The second most lucrative and safest investment option is a good partner in life.

 

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May be, safe investment, if you are cash rich otherwise rising interest rate from here on will be death for many.

One may not drown in five feet water (Anyone with average height and does not know swimming) but than every inch rise is getting closer to drowning.

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Early was tolerable or to say managable with pain but now for many who went overboard :

“Mortage  ? It's like a noose around the neck that slowly grows tighter every time interest rate goes up.

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From what I can tell the last time (2yr fixed mortgages) were at this level was something like mid 2015. House prices were significantly lower then, and nominal inflation has been roughly 16% from that period. Since banks only seem to care about loan serviceability it seems that there is a big correction due, as house prices have increased way more than 16%. I don't have the numbers at the moment. But some hand waving maths suggests that to get back to the same affordability as in mid 2015 we should expect house prices to be (rounding up a bit) 20% higher than in 2015.

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Or you can work backwards.  12 months ago 2 year fixed rate was 2.5%.  It's now 5.3% (according to the int.co chart, not the new rates).  On a 30 year payment schedule:

  • $800k mortgage @ $729 per week
  • $570k mortgage at $730 per week.  
  • Effectively a 30% reduction in borrowing power.  
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Very true. So I just found I had written down some numbers, average house prices Q3 2015 was 545K, and Q1 22 was 885K (factor of 1.6 increase). If house prices had followed the nominal inflation of about 20% as I mentioned above, then in Q1 22 that would give an average house price of 633K, resulting in a 506K mortgage with a 20% deposit. So the two approaches are not far off. 

 

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Should be pretty obvious, right?

There are other variables (many people will say), but the BIG-O is the cost of money, so I am keen to think that almost every other factors will average each other.

 

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People think despite a reduction in borrowing power, the cost of building a new home will underpin housing values  and borrowers will just magic up the difference.  People talk about "supply and demand" but conveniently ignore it when it comes to materials costs.  Like $40 for a sheet of GIB is a cost input issue rather than wholesale prices rising to meet what people can afford due to loose credit.  

e.g. If a house costs $200k to build, 1% of that is GIB ($2k), new house prices rise 20%, why wouldn't Winstone Wallboards jack up their prices by 20%?

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Yeh, I find those non-arguments as well.

Easy to work them out of the equation.

The hard wall is how much you can borrow, that is .

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Yes, some people don't seem to understand there are two types of new builds: commissioned and developed.

Commissioned is build directly for the owner, and they will be beholden to material costs.

Developed is where a developer builds, perhaps backed by someone else's deposit, and then delivers to the market (hopefully to the depositor, but we've seen a number of developers take the mickey with sunshine clauses recently). In the event it is the depositor completing the purchase, it is effectively commissioned. But if there is no depositor, or it's retained by the developers, it is now effectively second hand. In this scenario, build costs matter not, because it will be sold for what the market deems it to be worth (and hence the unscrupulous use of sunset clauses).

Interestingly, this dynamic is the same in a falling market as well as a rising market - and the cost of materials has no bearing outside of commissioned work on the final sale price - which is determined by what the buyer is willing and able to pay. And thus developers go bankrupt on completed builds when there are no buyers.

I think it is a crying shame that specuvestor behaviour in the NZ property market of the last few years has forced many FHBs to take the risk of a commissioned build, with all the delay it entails, rather than being able to purchase a second-hand home with the security of a few week's settlement - which after all is the reason they're buying their own home, right? Security.

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Must be interesting times for some developers with regard to sunset clauses right now, too. The shoe may be on the other foot and buyers may be looking to exercise it to get out of what's now too high a price build.

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Depends on how many inflationary pay rises you have had...

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Yes this is as simple as the calculation needs to be. Using 5 year data given by this page and the QV average house prices. Five years ago the 2 year fixed rate was 4.79% vs 5.29% now. Let's just assume they are the same even though they are higher and now and rising fast. 

Average houses were 663,000 in June 2017 and are now 1030,000. This is a 55% increase. Since June 2017 the CPI is 14% higher so houses should be at $756,000 which is 27% lower than now. Given interest rates are higher and rising they should be even more than 27% below today's prices. Arguably house prices were already over priced and unaffordable in 2017 also. It's going to be a while until there is value to be found in the NZ property market, unless prices fall a lot further.

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It is going to be very interesting to see where house prices and rents finally settle in NZ.

For me it is not the impact of a recession or rates rises that is scary - rather major shifts in geopolitics and the potential for more Ukraine-war like events. Means the investment risk is much greater in the future.

 

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It's easy enough to work out the non-value added component costs of development and building, which shows that houses are approx. 50% greater than their 'need to be price,' ie if we had the right Govt. policies that allowed a truly free market without all the unnecessary restrictions.

For example, Simplicity Living are direct importing plaster Board at a substantial price reduction (up to 40% less) than they can source in NZ if they can source it at all. ie with a proper free market, plasterboard should be 40% less than it is at present. You can do this with almost any component that goes into building a house in NZ and get savings. Some savings are small and some large.

The largest saving we could make is over the price of development land and infrastructure and consenting costs, ie the things that we have the most control over, yet allow rentier-seeking land bankers and bureaucracy to gouge the most.

 

 

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Seems like the problem is having too many in politics and governance belonging to that land banking speculator group, thus fixing the rules to suit themselves at the long-term expense of the country.

Was reading about Panasonic Homes last night. High-quality and relatively cheap prefab homes that can be shipped from Japan. The only problem looks like that because it's coming through Mike Greer homes they may be looking to just slightly undercut the market and have a far higher profit margin. Which might suggest that the likes of Kainga Ora or Kiwibuild would be better off reaching an agreement direct with Panasonic Homes Japan for importing at scale.

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Hi all first time commenting here on this site and hope I can put my 2 cents worth

The rates during the past couple years were extremely low in 2-3% range with great offers from all banks.

If a homeowner with mortgage did their homework on interest rates they would have fixed their interest rate for 5 years at 2.99% from early 2021 and sit back and relax for 5 years and enjoy the low rate as I am doing it now.

Once I checked in Dec 2020 the rates I was offered was 2.89%  (5Years) from ASB then I decided to wait and call them in Jan 2021. This time they offered me carded rate at 2.99% fixed for 5 years and they told me rates are firming up with no discount.

I quickly refixed at 2.99%(5yrs till 2026) in Feb 2021 and now I feel quite relieved that I made that decision not to fix for 1 or 2 years which was the best and popular rates that time.

I have paid 11.8% when I first took out mortgage but over the years its been very easy for meet payments when the rates continuosly went downhill.

Even today rates at 5 to 6 percent is pretty good deal if you can fix for longer term.

Good luck

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The route I took was to aggressively clear as much debt as possible while rates were low. My current fixed rate of 2.49% is coming up for renewal and will go onto floating at 5%+ but this does not concern me as I only have a small debt left and total interest remaining to be paid until the mortgage is gone is less than $1000. This approach is now paying effectively me 5.35% after tax - and rising.

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Well done.

When i grew up (not 'that' long ago) we were taught to do what you said, to save and pay down debt in the good times....  so we were always prepared  for the inevitable bad times. I thought even governments and banks did it too.

Seems that we loved the good time so much time round everyone just kept on spending and adding debt...... 

I feel most sorry for boomers/retirees who were persuaded to put their money into properties (because the savings rates were low) as they wont get a second chance. 

 

 

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Unfortunately I know lots of other people that have fixed for 5 years at what seemed like decent rates at the time, several times since the GFC economists have thought inflation was returning. Those people ended up paying 1-2% more for 5 years than they needed to, in many cases a bug sum of money thrown away. 

A lot of it comes down to luck. And there is also a good chance rates will go back down in a year or two and the 2 or 3 year rate may prove to have been the better choice, don't count your chickens yet. 

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Yeah, rates might come back down. But it's the risk of having high rates, is it worth to take the high rates risk just for 0.50% or 1% difference? Plus it will be very unlikely rates will come down to 2.99% again... at least not in 5 years time. It will more likely stay neutral for a while.

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Here's another fun one in the "I thought these low rates would last forever" series:

Epsom Villa Sold for 6.5mil in October 2021

https://homes.co.nz/address/auckland/epsom/8-claude-road/R07YZ

Passed in at auction today at 5.6mil..

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Wow, not a very competent investor, if it was bought for investment.

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But it had an 8 in the address....Hope they like living there because the will be holding for a while.

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Could be something dodgy going on.  

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hmm

Vast 8 Investment Limited has current tittle 

 

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Buyer agent for foreign investors?  Director on a whole bunch of "companies", with completely different shareholder names under each. 

https://app.companiesoffice.govt.nz/companies/app/ui/pages/individual/s…

I note the 8 Claude Road property had the mortgage instrument loaded by "DX Law Limited", a Mandarin fluent property law firm.  

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Most of the Companies are very new. Looks like investors and has a business partner in common

Very busy people

https://app.companiesoffice.govt.nz/companies/app/ui/pages/individual/s…

 

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.

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