With interest rates forecast to rise, is now the time to fix?
The simple answer to this is, yes.
For those of you who know me you will know that we always advocate fixed interest rates and a structured repayment plan for people earning a fixed income, which is most people.
However, with an increase in the Official Cash Rate (OCR) forecast for March, which will lead to an increase in floating rates, you definitely want to be reviewing any floating lending that you have and making sure you are not facing a large increase in your monthly payments due to the increased interest cost.
This is an ideal time to set some financial goals and review your loan structure to make sure it is working well for you. It is also an opportune time to look at whether you are getting the best deal from your current lender as there are some really good discounts and offers available in the market at the moment. Much better than the standard discounts if you are part of a union or workplace banking scheme too.
But what is the best fixed rate for you? That's a question that can only be answered when taking your personal situation in to consideration. Do you plan to repay any lump sums in coming years, will your income change, are you considering selling and buying another property? All of these things will effect what is right for you and which balance of fixed rates is going to be the best fit.
At the moment there is definitely a premium being paid for the certainty of longer fixed terms. While the shorter terms are cheaper now, they will be more effected by the increases in the OCR and may see some people having large jumps in repayment amounts when these short terms expire.
We think the graph above illustrates things perfectly. Overall interest rates are lower now than they have traditionally been so it is a good time to fix.
Get in touch if you would like to discuss the best option for you and we can not only negotiate the best interest rate for you but also ensure you have a structure that will help you to achieve your financial goals in the long term. All free of charge.
If you know of anyone across New Zealand or overseas who would like advice on a home loan and help finding and arranging the very best loan from a range of lenders then be sure to direct them to our contact details. If you are in the Eastern Waikato (Matamata, Te Awamutu, Cambridge, Hamilton) we are happy to come and visit you to discuss situation.Adam and the My Mortgage team