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

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.

04
Dec

Reserve Bank expected to hold OCR steady

Economists expect Reserve Bank governor Alan Bollard will hold rates steady this week despite evidence the economy remains surprisingly strong.

Bollard’s official cash rate (OCR), which has a direct bearing on floating mortgage rates and a lesser impact on fixed-rate home loans, currently stands at 7.25%. more…