08
Mar

Interest rates

We were absolutely thrilled yesterday to hear the Reserve Bank Governor announced that he was keeping the OCR the same.

As I have mentioned in past newsletters, it is reviewed every 6 weeks on a Thursday. Sometimes it is a live telecast and we all sit in the office and use it as team time to watch and listen. We find the Journalists questions and therefore the answers far more enlightening than the basic announcement (and some Journalists questions more entertaining from their stupidity).

There has been a lot of talk, speculation and crystal ball gazing about when to fix, or keep floating. What we all sure do now know is that newspapers sell by feeding us stories, fact or fiction.
I have wondered whether we should keep an annual diary of the headlines, because it seems to be the same headlines at the same time of year, every year. Property investors now know that having a empty property at the beginning of the student year is a good thing! The media will report it and run it for several days. Ho hum…it’s the same old same old.

However, the media certainly do cause many clients stress and any indication that rates could rise causes concern. The simple answer is you fix when you are happy with the rate being offered and can live with it. If funds are tight and you cannot take the risk that the rates will rise – fix. Fixing your mortgage is just like taking out insurance. You are buying security.

This Global Financial crisis and certainly the issues in Greece and the rest of Europe are a major headache for many. This is history in the making and not something we can look to the past and predict any specific behaviour because we have seen it before. I personally believe politicians and economists do not really know what is going on. They can make as many assumptions as they like, but ultimately money is spent by human beings, this crisis is not a repetition of the past and our behaviour can change simply by what we are being fed by the media.

As you are aware, interest rates are at the lowest levels for many years. These times present good opportunities for borrowers to reduce debt by repaying their loans off faster. Many clients are quite happy to coast along and risk a floating rate. Others are now starting to want some level of certainty.

Banks are now knocking on our doors wanting to negotiate rates for clients. We have come to the conclusion if you need some certainty in your life and your expenses are one area that you want to control, then it is probably time to fix your mortgage.

As always we do not charge to review your mortgage and we will help by obtaining some good longer term fixed rates to guarantee that certainty.
just click here to send us an email or you can contact Bevan directly on bevan@stml.co.nz, or Sue on sue@stml.co.nz

19
Feb

To fix or not to fix

The financial crisis certainly has made it interesting times. With something like 74% of all mortgages due to mature off their fixed rates this year, 2010 is not only going to be interesting but stressful for some. Do we fix or do we float? When are rates likely to increase? What could they increase to? All sensible questions but everybody has their own opinion and answer to this. I was fascinated with BNZ Economist -Tony Alexanders’ take on it last week…. Download his weekly overview of 11 Feb 2010