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Get set for rising interest rates

Get set for rising interest rates

Now is a good time to prepare for rising mortgage interest rates said the New Zealand Bankers’ Association in response to the Reserve Bank of New Zealand’s Official Cash Rate statement today.

While the OCR has been left unchanged at 2.5%, the Reserve Bank has recently projected the cash rate could rise by 2.25% over the next two years.

“Mortgagors have enjoyed historically low interest rates for over two years. The cycle is now turning with some interest rates starting to rise,” New Zealand Bankers’ Association chief executive Kirk Hope said.

The OCR will continue to be an important driver of interest rate changes, but there are other factors that influence the level of the rate change including the cost of funding from domestic deposits and the cost overseas wholesale funding.

“Now’s the time to assess your circumstances and get your finances in order so you can manage an increase in the cost of borrowing. This is especially important for first home-owners who have borrowed at very low rates.”

“Talk to your bank if you have any concerns. Banks are happy to provide information about products and services to suit individual needs.

“On the flipside, the projected rise in interest rates is good news for people with term deposits. People who rely on interest income from investments, especially retirees, haven’t done so well recently. They stand to benefit from rising deposit rates,” added Hope.

ENDS

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