21
May

Fixing your mortgage

If your home loan is floating or about to mature off its fixed rate in the next month or two, you may now be wondering if it is time to fix.

The Reserve Bank Governor will next review the Official cash rate on 10 June. Many bank Economists expect the Reserve Bank Governor will begin to increase the OCR on this date. The real question we don’t know the answer to is, by how much? Could he increase it by .25% or .50% or could it be even more.

Today the main trading banks are offering floating interest rates around 5.75% pa and 1 yr fixed at 6.35% pa. The lower floating rate has meant that we have gone against the tradition of fixing mortgages and remained on these lower floating rates

This .60% pa margin on the lower floating rate has been a driver for that decision. The question is of course “will the margin between the fixed and floating rates shrink as the Banks find their cost of funding rising due to a higher OCR.?

The downstream impact on NZ and other global Banks from the bailout of Greece and potentially other struggling Economies in Europe is bound to result in increasing longer term borrowing rates. There have been increases over recent weeks that have not hit the headlines.

We now think you should be considering fixing your mortgage. If having the certainty of mortgage payments is important to you; and more important than having the lowest rate, you may choose to fix your mortgage now.
We are here to help you with the refixing process. Please either call Dom on 360 7768 email support@stml.co.nz or me on 9147555 so that we can start the ball rolling for you.