How low can they go?
The banks have once again waged war on each other and slashed mortgage rates well below record lows. The most recent drop occurred in rapid-fire succession, with each bank following another down.
One-year special fixed rate terms are now comfortably below 3% for those with more than 20% equity (or a 20% deposit for first home buyers). This is a figure scarcely imaginable even a year or so ago.
Rates across other terms are also well-down on anything anyone in NZ has seen before.
So what? – pocket an extra $98 a week
Against a backdrop of economic trouble, this should be welcome news for many homeowners, property investors, and first home buyers. Look at this example of how much you could save:
A couple took out a mortgage two years ago and still have $450,000 principle to repay. Their current interest rate is 4.5% (which was a good rate just a couple of years ago!), and they have 28 years to go. If they now secure a lower rate of 2.79%, and – for the purposes of illustration – those savings are continued for all the remaining 28 years, they could save the scarcely believable figure of $98 every single week. Don’t believe us? – try running your own calculations on this mortgage calculator.
Those who use the extra $98 of weekly savings explained above to repay their mortgage even sooner will save even more – and cut years from the overall term. This should be a relief to many Kiwi families during what may be a challenging time, as many face job losses or other financial uncertainty.
No decisions can be made on how long these rates will be available, and as always, that largely depends on overall market conditions.
Bank against bank
In the dog-eat-dog banking world, it’s often our experience that banks will strive harder to take customers off each other than they will to try and hold on to existing customers. This means you might get a better deal by switching your mortgage between banks. Naturally, there is no “one size fits all” solution in this area, so you’ll need to evaluate your overall financial situation before making a decision.
The bottom line - mortgage wars
Mortgage rates are at all-time lows. If you think you’re in a position to make the most of the wars between the banks, then why not get in touch for an obligation-free chat with one of our mortgage brokers (advisers) by leaving your details below.
As always: please keep in mind that interest rates are subject to change, and that even with the LVR rules removed, there’s still lending criteria to be met with all lenders (banks).