Reduce recession anxiety - get finances in order
Media Release 30 April 2009
Reduce recession anxiety by getting your own finances in order
The Retirement Commissioner Diana Crossan says consumers shouldn’t get overly anxious about what official cash rate movements might mean for the interest rate on their loans and investments.
The Reserve Bank announced today a fifty basis point reduction in the official cash rate, which controls the interest rate it charges on money it lends to New Zealand banks. The rate has dropped from five per cent at the start of the year to two point five percent.
Diana Crossan says it’s not possible to predict what will happen in the future and she’s urging New Zealanders to concentrate on their own budgeting and planning to provide them with some financial certainty.
“No one really knows how long this recession will last and how big the impact will be. The official cash rate is just one of the indicators of the state of the economy. Rather than focusing on the official cash rate and trying to work out what will happen with interest rates, we should be making sure our own finances are in the best possible shape.
“For some, that might mean starting or reviewing their budget. For others it might involve setting up an emergency fund so that you have a financial buffer. If you are concerned about interest rate movements, and you have a mortgage on a floating rate there are several options you could consider. One of those options is to split your mortgage between fixed and floating rate.”
The Quick mortgage calculator on sorted.org.nz can help you work out repayments for the different interest rates. Sorted.org.nz also has information to help people with things like budgeting, goal setting, managing debt and investing.