Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Home owners move to break fixed term mortgage contracts

Home owners move to break fixed term mortgage contracts for peace of mind

The Reserve Bank of New Zealand’s move to increase the Official Cash rate by .25 of a percentage point at the end of last week, has seen a surge in inquiries from existing fixed mortgage interest rate holders looking to break their current terms and secure longer term contracts.

Auckland mortgage broker and principal of integrated financial services provider LoanPlan, Christine Lockie, says the move by the Reserve Bank will definitely affect variable interest rates over the short term but, this combined with the increasing cost of funds overseas, was having a big impact on fixed term interest rates.

“Moves like that of the ANZ to lift its three year fixed term to 6.85 per cent – up .45 per cent compared to six months ago – has resulted in a flurry of inquiries form people who have 18 months to two years left to run on their fixed term contracts.

“Essentially they don’t want to be caught out by even higher rates when their fixed term contracts mature. So even people who are paying 5.5 per cent at the moment, for example, are happy to pay above 6 per cent for peace of mind.

“They are not comfortable with the idea being caught out by even higher interest rates in 18 months or two years, ” Ms Lockie said.

Some four and and five year fixed rates are well over the 7 per cent threshold.

She said the main pressure on fixed term mortgage interest rates is from the rising cost of overseas funds on the back of strengthening world economies.

Ms Lockie said expectations that interest rates will rise about two per cent over the next two years meant clients were happy to accept discounts of .2 or .3 from the banks, although the exact discount depended on the circumstances, size of the loan and the fixed term they wanted.

“I think the inquiry is causing some bottlenecks within the banks because they are certainly in no hurry to respond to requests to change fixed term contracts. But certainly we are driving to secure more favourable rates for our clients.”

Ms Lockie said the rising interest rates will naturally reduce the ability of first time home buyers to get in to the market because it reduces the amount they can borrow.

The New Zealand Reserve Bank went up .25 on the basis of rising house prices, a lift in export income, gains in consumer and business confidence and strong inward migration.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news