The Current Financial Position Explained – June 2019

Every month it seems we are writing about a new low mortgage rate. And this month is no exception!

The rates have continued to drop to unprecedented lows. Every bank has some kind of an offer on the table that is under the 4% threshold.

The big four – Westpac, BNZ, ASB, and ANZ – are all offering a rate of 3.85% for 2 years or 3.85% even for 3 years. Kiwibank and TSB also have interest rates under the 4% mark too.

Basically, there has never been a better time to review your mortgage. If you haven’t looked at your rates in a while, then you could be making some big savings by simply tweaking the structure or interest rates. If you are interested in knowing what your position could look like, then give us a call here at Mortgage Suite today.

Will The OCR Move Again?

No one has a crystal ball to predict the exact future, though it would be nice! However, by watching the trends around the world, reviewing history and trusting their experience, economists can make a pretty clear prediction on what might happen.

So, will the OCR drop even further?

The economy and housing market are only just starting to see the results of the last rate cut. So, it is not 100% certain whether that action alone will have the desired result on the economy that the Reserve Bank was looking for.

However, in a recent survey of economists by The New Zealand Mortgage Mag, 85% of those surveyed believe that the “central bank’s Monetary Policy will opt to keep the OCR at its current record low.”

They are also predicting further cuts to the OCR, potentially in August and November of this year because of the global position. “Amid escalating trade tensions between the US and China, and falling GDP in major economies, leading economists say the bank could point to increased risks to the domestic economy.” [source]

We can only watch and wait to see what will happen, and what it will mean for the economy and interest rates.

First Home Buyers Building Market Share

While there is still a lot of commentary on housing prices being too high, it doesn’t appear to be stopping first home buyers. They are steadily building their market share. “First home buyers continued their strong streak in April borrowing $964 million, compared to $868 million in April last year.” [source]

This could largely be a result of increased use of the bank of mum and dad! In fact, “the bank of mum and dad lent an estimated $71 million last year, according to a presentation from New Zealand Trustee Services at last year’s Financial Advice New Zealand conference.” [source]

Westpac recently conducted a survey that shows “the older generation are willing to act as guarantors, quasi-lenders, and gift-givers for their children. About 55% would be prepared to gift money, 21% would offer a loan with interest, and 18% would buy a property outright for their kin.” [source]

Despite the strict lending criteria of the banks, there is still an opportunity for first home buyers. Especially if they are able to get help from their parents. Get in touch with us here at Mortgage Suite if you would like to know how this kind of lending might work for you.

Where Should I Get Advice?

Canstar have also conducted an industry survey, and they discovered “only 27% of New Zealanders view their bank as a place to get good financial advice.” [source] This seems to have come in the wake of the Australian Banking debacle, as well as the investigation and sanctioning of some of the banks here in New Zealand.

So, what does that mean? Who can you trust for your financial advice?

The answer is simple, a qualified Financial Advisor like the team here at Mortgage Suite. We ensure that we provide you with the best advice for your individual situation. The great thing is, any decisions regarding your finances rest with you. That means you are always in control and can choose the option that suits you best.

Get in touch with us today for a free no-obligation chat about how we might be able to improve your financial position.