OCR Review: 1.75% – the Reserve Bank next reviews the OCR on Thursday 11th May. Though the OCR rate hasn’t changed since 10th November 2016, we have seen an increase in bank retail interest rates and in particular the 3, 4, and 5-year long-term rates as a result of the increasing cost of overseas funds. Interest rates have settled again over the last month, however, we are starting to see signs of inflationary pressures in the NZ economy that point to the Reserve Bank increasing interest rates earlier than expected 2-3 months ago. Potentially we may see the OCR increase in June/August this year which will see the floating rate and 1, and 2-year short-term rates begin to rise.
Property Update: Housing market momentum is moderating, notably in Auckland, as the combination of higher mortgage rates, LVR restrictions, stretched affordability and tighter credit criteria impact. We continue to see a mismatch between supply (building consents are falling) and demand (net migration is still strong) which points to upward pressure on prices, however, the broader “conditions” including tighter credit criteria, affordability and rising interest rates, are now taking effect. The prospects of higher interest rates are a key factor restraining the market and we’re not expecting another surge in house prices for a while.
Product Knowledge/Tip: If you are a first home buyer who plans to use their KiwiSaver Withdrawal for a deposit, you might also be eligible for the KiwiSaver HomeStart Grant. This Housing New Zealand link provides a great checklist – http://www.hnzc.co.nz/ways-we-can-help-you-to-own-a-home/kiwisaver-homestart-grant-and-savings-withdrawal/kiwisaver-homestart-grant/homestart-grant-eligibility-checklist
If you plan to buy an existing home you may be eligible for a HomeStart Grant of $5,000 each and if you are looking to build a new home (or buy one that is less than 6 months old) you may be eligible for $10,000 each.
Haven Mortgages have been able to negotiate the following loan package for one of our existing clients this week through ANZ (as you can see we can get some great discounts!):-
Scenario: Client purchasing new home for $1.550M with lending of $850,000 (deposit made up using existing Revolving Credit Facility and Cash Savings)
Cash Contribution: $4,500 (LVR 55%)
Floating Rate: 4.99% (Discount 0.80%)
Flexi RC Rate: 4.99% (Discount 0.91%)
1yr Fixed Rate: 4.25%
2yr Fixed Rate: 4.49%
3yr Fixed Rate: 4.84%
4 Key Reasons Why You Should Speak to a Mortgage Adviser:
- An adviser will guide them through the process and make it less stressful
- They have a range of funding options
- An adviser can make sure that you are getting a very competitive loan package and the advisers don’t charge for their services
- We can give them loan structure advice, and help them pay off their mortgage sooner
Give Haven a call with any scenarios you have, we can look after your new home purchase, investment purchase, refinance, fixed rate review or loan restructure.