The OCR has been cut recently by 0.5% – a lot higher than many economists were initially expecting.
What might this mean for the borrower?
Over the last fortnight, we at the Kris Pedersen Mortgages team have seen some key effects come into play: across the market floating rates have dropped
and in many cases, as much as 0.5%. Lenders like ASB for example took their floating rate down from 5.70% to 5.20% with others following suit. This
means for those clients on floating rates their interest rates have just been reduced, and often when adding the floating discount that many banks
offer, many Kiwis are now seeing their floating home loans as low as in the 4% point range.
Whether we will continue to see rates drop even further will be interesting, as some economists are still predicting one more OCR cut later this year.
So, generally speaking, if you are in the market for a home loan, what should you be looking at?
If you don’t have a discount from your bank on your floating rate (standard floating, or otherwise – offset/revolving credit, etc.) then it’s worth asking
for one. Most lenders on standard residential mortgages are offering 0.25-0.65% off their floating rates just for asking the question, and we’ve even
seen some discounts significantly higher than that.
At the moment it is a great time to review your current fixed rates to determine if you have the best of what the market has to offer. It makes sense to
run an analysis on whether it is worthwhile to break and re-fix your mortgages. With how low rates are, in many cases we’re seeing clients achieving
substantial savings simply by paying the break cost to get onto a...
