So, the tables have turned and we've finally entered a buyer's market - but how do you navigate the apparent minefield of increasing mortgage rates and falling house prices?
With so many different forces playing out in the market right now - interest rates, inflation, the border reopening - how far might they go?
We come bearing good news, investors! As of the 21st March 2022, the rate of return across two of our Investment Classes – Home Loans and Construction Loans – has increased by 0.25%.
In this article we’re looking at how to pick the right fixed home loan rate term in a rising interest rate environment.
There’s something mildly exciting about the Reserve Bank doing something unexpected. It’s like finding $5 in your jeans. I’m a borrower so I’m loving the prospect of lower rates but I’m also a realist and know that the reasons behind the OCR dropping are worrying. We should all be using this opportunity to pay back debt and build safety buffers into our lending.
Our view is that mortgage rates will stay low for the foreseeable future, but they are unlikely to drop much further. To explain this, we'll look at the bigger picture, and shed some light on how the OCR affects mortgage rates.
12 Month interest rates are particularly appealing at the moment. Kiwibank has most recently offered a 12-month fixed rate sub 4% and many banks are moving in the same direction. This is fantastic for the next 12 months, however it pays to think about what you are going to do post the expiry of this rate.
I get asked daily what’s happening with interest rates. To answer this question, it’s useful to first define what may affect interest rates. The major influence on interest rates is inflation. As inflation rises, interest rates rise to curb inflation (spending). As inflation falls, interest rates fall to spur spending and economic growth.
In typical tabloid fashion, the media desperately try to make news out of anything that drives fear and every eight weeks or so we have the anticipated build up to an OCR announcement.
When it comes to your mortgage it pays to know it inside and out. After all, when such a large sum of money is at stake the last thing you want are surprises and unexpected costs.
The reality is that the industry is looking to mortgage margins to restore profitability from a tough 2016.