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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news