Following the recent speculation around New Zealand’s Official Cash Rate heading into the negatives, economists are expecting that along with the Reserve Bank’s lending program, we could be seeing home loan interest rates drop below 2% for the next couple of years.
A reduction to our already record low interest rates will come as great news for those looking to get onto the property market, as well as investors. This would also help to drive more activity in the market and keep house prices reasonably stable.
What if you already have a mortgage?
If you have an upcoming mortgage term that is due for a review soon, we believe it is worth sitting tight and locking in for 12 months rather than the longer terms, to catch the negative OCR.
If your fixed term is 6 to 12 months away from rolling over, it is also worth waiting for the rollover date before exploring options. Break fees are significantly high at the moment and take away any advantages of breaking and refixing.
Cash backs offered by the banks at the moment generally aren’t enough to cover the break costs.