This article talks about the Official Cash Rate (OCR) and its impact on mortgage interest rates in New Zealand. The OCR has remained unchanged since May and is unlikely to change in the near future. However, some economists believe that mortgage rates could still increase even if the OCR stays the same.
The reason for this is that banks get a significant portion of their lending money from borrowing internationally and from customer deposits, which are not directly affected by the OCR. Higher wholesale rates and competition for deposits have led to an increase in mortgage rates.
Around 30% of mortgage holders are expected to face higher rates soon, causing financial difficulties for them. Two years ago, mortgage rates were competitive, but as those fixed-rate terms end, rates are rising.
Experts suggest that fixing mortgage rates for longer terms, such as three years, may be a good option, as interest rate cuts are not expected anytime soon. They also mention that inflation has been brought down, but there is still some concern, and the Reserve Bank may need to raise interest rates to control it.
Overall, mortgage rates are likely to remain high for now, but there is hope that they may start to decrease from May 2024 onwards. It’s important for borrowers to carefully consider their options and decide whether to fix rates for longer or shorter terms, taking into account the current market conditions.
Source from Onerrof: by Diana Clement
Additional commentary from him can be found at https://www.oneroof.co.nz/news/latest-news/third-of-mortgage-holders-face-stinging-rate-pain-in-next-few-months-44566
The opinions and research contained in this article are provided for information purposes only, are intended to be general in nature, and do not take into account your financial situation or goals.
