They’ve been tracking steadily downwards in recent weeks, but wholesale rates seem to have settled somewhat in the last few days—just holding firm.
In terms of what that means for mortgage rates out in market…
The best one-year rate currently on offer is a special rate of 4.39% from TSB. We’ve also got Westpac offering a three-year rate at 4.75% and a number of lenders offering a five-year term at 4.99%.
Whichever way you cut it, we’re now getting very close to the bottom of the interest rate cycle.
Although we’ve talked previously about the chance that we could see the one-year rate get down below 4.00% towards the end of this year, that’ll be heavily dependent on us getting a further 0.25% Official Cash Rate (OCR) reduction on 26 November.
Opinions are now mixed on whether or not it’ll eventuate—and it feels like there’s a roughly 50:50 chance the Reserve Bank could choose to either drop or hold.
With that said, anyone looking to refix or settle on a new mortgage in the coming weeks may just want to hold tight until we’re through that last OCR announcement of the year, to see where rates end up off the back of it before you lock in.
If you’re in a fixed rate rollover scenario, it’s a pretty straightforward process. Your loan will roll onto a floating rate in the meantime, until you do decide to fix.
Anyone buying a new property might want to put at least part of their loan on a floating rate for now, with a view to fixing later this year or early next—once any further rate reductions have had the chance to flow through.
Whatever happens at the shorter-term end of the spectrum, longer-term rates aren’t expected to fall much further, so fixing part of your loan for either three years at 4.79% or five-years at 4.99% is a great option.
Check in again next week for the latest news and views on New Zealand interest rates.
