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OCR Announcement Rise 0.25% - Its Not All Bad

Media release from Mike Pero Real Estate

OCR Announcement Rise 0.25% - Its Not All Bad

Mike Pero founder and director of both Mike Pero Mortgages and Mike Pero Real Estate

This morning the Reserve Bank made the anticipated announcement of a rise in the OCR.

The rate has gone from 2.5% to 2.75% and further rate increases are predicted through 2014 that could see the OCR up to 4.50% in 2015.

So what might this do for home buyers and home owners with mortgages.

If or as banks choose to pass on this increase, in time, then today's announcement could mean an increase in repayments as follows:

The interest component will increase payments, for a $100,000 home loan by $4.81 a week

$200,000 - $9.62 a week; $300,000 - $14.43 a week and $500,000 - $24.04 a week.

In my opinion the increase is neither here nor there. It was inevitable it would raise but I do not think it will slow the market. To offset any perceived negativity here the banks are starting to ease their restrictions on high value lending. The LVR restrictions that came in late last year have cooled some sectors and achieved their objectives.

For aspiring home owners the outlook has changed slightly but its my belief that the rise will not deter the serious home buyers.

The reality is that the two major centres, Auckland and Christchurch still have consistent momentum – the demand continues for their own reasons.

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