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Mortgage advice: rates are on the rise!
Up until recently, fixed-term mortgage rates in New Zealand were at record lows. Our advice suggests all that's about to change - so what does that mean for you?
The writing appeared to be on the wall this week, when we were notified that most of the major lenders had increased their fixed-term mortgage rates. After so many months of seeing rates progressively decline overall, and while we all knew this day would come, it was certainly something to make us stop and think.
Here's how mortgage rates have changed in the last week.
The number of red arrows on this chart says it all!
While predicting mortgage rates is a little like predicting the weather, many experts are expecting rates to continue to trend upwards in the short to medium term.
So, why are mortgage rates rising?
In simple terms, it's because the costs of overseas funds are increasing, due to world markets (particularly following the Trump election).
Even though New Zealand's Official Cash Rate (OCR) continues to fall, all that means is that the banks will seek to borrow funds overseas, where the returns are higher. This means New Zealand borrowers will feel the effects of international market fluctuations a little more deeply.
What does it mean for existing home-owners?
Well, the obvious. If you've got a fixed term mortgage rate locked in (hopefully at a low rate), you'll need to prepare for the likelihood of interest rates being higher by the time you come off your fixed rate. Meaning of course that your mortgage repayments may be higher at that time.
If you're looking to re-fix your mortgage in the next little while, it could be worth doing this sooner than later.
What does it mean for first home buyers?
If you are poised and ready to get on the property ladder it could be a motivator to find that first home sooner than later, if you want to secure an interest rate before they climb even further.
Banks have definitely tightened up on their lending criteria in recent months as well (having said that there are still options for those with low deposits).
We do like to remind people that interest rates aren't everything - there are other factors to consider when securing a favourable mortgage - but low rates certainly do help.
Feel like it's time for some advice?
Whatever your situation it can be extremely worthwhile to talk things over with a non-aligned professional - even if it's just to bounce an idea around or ask a question that's been nagging at you.
Having an adviser on your side when it comes to negotiating and meeting with banks, securing loan approvals and handling the paperwork, can deliver significant advantages. We can review your personal situation together and, if it's the right move, will structure a mortgage to suit you - whether it is for your first home or your seventh.
For a no-obligation chat about your mortgage options, send us an enquiry today or call Steve Davies, Mortgage Advisor directly on 0800 327 956.
It's a service that comes at no cost to you*, and puts your interests first - learn more here.
You might also be interested in: How to pay off the mortgage faster
Or this one: Think you can't buy your first home? Think again!
Credit: Mortgage Rate Chart thanks to mortgagerates.co.nz as at 30/11/16.* Our standard Mortgage Advisory service is provided free of charge as we are remunerated (paid) by the banks, but we also provide specialised services and advice for non-conforming, credit-impaired, business and complex cases. After our free initial no-obligation consultation, we will advise you if a fee may need to be charged before we undertake any work. In many cases we may find a simple solution for you. The information contained in this publication is general in nature. It may not be relevant to individual circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser.