As expected the Reserve Bank left the Official Cash Rate (OCR) unchanged again last Thursday at 2.50 percent
Source: http://www.rbnz.govt.nz/news/2012/4874330.html
As always it’s more a case of what the Reserve Bank “says” than what it actually “does” when it comes to gauging the future direction of interest rates. The Reserve Bank’s comments this time are some of the most pessimistic we have seen in memory. Clearly the Reserve Bank Governor is under no pressure at present to even consider removing monetary policy stimulus. All of this bodes well for homeowners with a mortgage as the likelihood of interest rates increasing in NZ anytime soon is remote.
In saying this there has been in recent weeks some escalation of the cost of funds for banks here and slight increases to some of the advertised fixed rates on offer. We note though that the “negotiated” rates available today are still lower than what was on offer previously. Intense competition from the banks to lend money should keep interest rates at their present levels and whilst inflation is running at a 13 year low a combination of both will mean that borrowers look set to enjoy continued periods of “cheap” interest rates. Short of a major escalation in NZ’s economic performance (not to mention the rest of the world) there is no pressure on central banks to warrant an increase in interest rates. We continue to encourage our clients to be saving money now by repaying as much as possible off their outstanding loan amounts with their banks whilst these low interest rates remain available.
Do I float or fix my mortgage now? – We still it been more advantageous to float at present and reap the benefit of a lower floating rate (with the discounts we can negotiate for you). In saying that there continue to be some very good longer term fixed rates on offer from the banks (with discounts applied) and many people who want certainty with their repayments have wisely opted to fix now.
Please remember to contact us if you do want to fix or if you are going onto a floating rate with your bank as we are able to negotiate discounts that are not available to you if dealing directly with the bank yourself.
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