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

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news