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

 

Balance Of Trade: NZ Posts Trade Deficit In October On Falling Dairy Exports

New Zealand’s posted its largest monthly trade deficit for October in six years, while narrowing the shortfall from September, led by a fall in dairy exports to China while all main imports into the country rose. More>>

ALSO:

Gigatown Winner: Plenty Of Positives For Dunedin

Although the city has taken the Gigatown title, along with new ultrafast 1Gbps broadband and funding for $700,000 worth of UFB-related initiatives across the community, Mr Cull says Dunedin has gained so much more through its involvement. More>>

ALSO:

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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