The OCR Could Fall Further
You may remember that last month the prediction from leading economists was that the OCR was to remain constant. Well, this month that has all changed. In fact, the new prediction is that the rates will fall further in both August and November.
Westpac, ASB and ANZ are all predicting that the Reserve Bank will lower the Official Cash Rate in both August and November. Westpac chief economist Dominick Stephens, says the “domestic economy has clearly slowed further than anticipated”, and the slowdown will prompt the RBNZ to take drastic action. [source]
The Reserve Bank’s predicted decision is thought to be because of lower business confidence, a rise in the exchange rate, and the global economic position. Previously, it was thought that the economy would pick up in 2019, but that has not proven to be the case.
These changes are expected to impact the housing market, causing it to slow even further and also for house prices to rise. It could mean that now is a great time to explore your mortgage options. Get in touch with me today to check in on your financial position.
Current Mortgage Rates
Just when we got over the excitement of mortgage rates being below the 4% threshold, the major banks have taken them even lower.
BNZ was the first to announce a new 2 year fixed rate of 3.79% for owner-occupied houses, which ASB, ANZ, and Westpac quickly matched. The great mortgage price war of 2019 is showing no signs of slowing just yet.
At this point, it is hard to say if mortgage rates will drop any lower. It will just be a case of waiting to see what the Reserve Bank decides to do with the OCR. If the OCR does drop as predicted, then mortgage rates could also lower comparatively.
With rates plummeting, now is a really great time to check that your mortgage is still working for you. If it has been a while since you last reviewed your rates, then a mortgage review is a good idea. You could be saving money on your repayments simply by restructuring your loan or fixing at a new interest rate. We can help you work out what is best here at Mortgage Suite.
Potential Change To Servicing Rates
We often see the New Zealand financial market take their lead from what happens in Australia. Recently, Australian banks have had their serviceability rates cuts by APRA. This could mean that we see a loosening of serviceability criteria here in New Zealand too.
What does that mean?
It means that financial advisers are hopeful that more people will become eligible for finance if the relaxing of the serviceability tests does go ahead.
Obviously, it won’t mean that everyone will eligible for a home loan. There will still be restrictions in place to ensure the borrower can comfortably service the loan on their existing income. Some people will still face hurdles when it comes to the bank’s criteria. But it might mean people that are on the cusp of making a deal work in the current conditions could get it across the line.
Only time will tell if New Zealand will follow Australia’s lead on this one.
The current economic conditions have really made changes in the market. It means that great rates and structures are available to new and existing borrowers. If you have not reviewed your mortgage in a while or you have been thinking about getting on the property ladder, now is the time to try.
And we can help you do it here at Mortgage Suite. Get in touch with us today to check your financial position and what your next steps might be.