We received some slightly disturbing news in our inbox today. It was the first time we had had an email all year advising of an increase in an interest rate with ASB putting up their 1 year special from 4.35% to 4.39%.
Now we're not saying the sky is falling or that it is time to panic but along with the Reserve Bank deciding to keep the Official Cash Rate on hold last week, the signs are definitely pointing toward a flattening off in interest rates and this will no doubt lead to increases on the horizon.
General market commentary is that there may be another OCR drop at some stage, depending on a number of factors surrounding economic growth and of course the dairy payout. The Reserve Bank seem content to use other measures to stem the Auckland housing boom so we don't see them being afraid to drop the OCR if they think that's what the economy needs.
Personally we think the image above sums things up well, flat for a while yet but it's more likely to be rising at the end of that road than falling. If there is to be another decrease in the OCR then we suspect the banks may have already priced this in to their fixed interest rates. But only time will tell.
That crystal ball gazing is all good and well, but we're interested in what it means for your everyday borrower. Those who have dealt with us in the past will know that we favour longer term fixed rates as they allow you to have some control over planning for your future. So long as you balance this with the flexibility of being able to repay extra and timing your fixed rate expiries to important times in your financial life.
So... What to do? If you've got Home Loans that are floating, or are due to expire in the next few months then we suggest that it is a great time to have a review of your financial position and ensure that you have a good plan with your fixed rates so that your home loan fits with your financial goals.
Feel free to send us an email and we can undertake a review of your position and give some advice on the right structure for you. We can also negotiate interest rates direct with your own bank and explore options with other lenders.
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We look forward to talking to you soon.The My Mortgage Team