The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Source: http://www.rbnz.govt.nz/news/2011/4527036.html
So…should I fix or float?
From the tone of the Reserve Bank’s statement today it is clear that interest rates should remain low for a while yet but only if the current financial turmoil overseas continues. As we have mentioned previously at some point the cost of borrowing for home owners in New Zealand will increase. For many households on a budget fixed interest rates will give borrowers certainty long term with their repayments every fortnight. If interest rates increased in the coming years by 2% p.a. this would see an extra $500 per month added to the cost of an average mortgage of $350,000.
As always an individual’s personal circumstances dictate their decision whether they float or fix their mortgage with their bank. Just because your neighbour happens to be floating his/her mortgage at their bank doesn’t necessarily mean you should also.
Please contact us if you or a friend or family member is looking at a new mortgage or has one due to expire. Deciding on an appropriate interest rate strategy is one of the biggest financial decisions you can make with respect to your available household income over the next couple of years. The banks are quick to entice borrowers with a good short term or floating rate today but a lot of thought needs to be given to what interest rates will be doing in the future. We are more than happy to lend our experience and expertise to your decision and negotiate with the banks on your behalf to ensure that they give you a good deal.
Kind Regards
Simon
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