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Keith’s Market Update Tuesday August 2019

From the desk of our Keith

Banks are now talking about the OCR dropping today to  1.00% and anticipated dropping to 0.75 by year end 2020

Retail lending rates could fall further, by YE 2020 – maybe fixed rates around 3.00%

With that in mind, today, I would now change my strategy and look to fix for 12 months ( currently 3.75%) then in 12-18 months time capitalise by refixing for a longer period, maybe 3 years at say 3.55% and therefore giving you a low interest rate for an overall 4 year period.

4 years ago, $500k loan around 4.89% could see repayments $2651.00 per month

Today, $500k loan at 3.75% = $2316.00

End of 2020 = $2108.00 ( that’s a 20% drop in loan repayments per month in a 5 year period)

Note: Assumes 30 year term, principal and interest.

Borrowing money has never been cheaper, and therefore less of an outlay on the budget than where it was  5- 10 years ago.

As an example if you borrowed $375k in 2014, the loan repayments will be similar per month compared to borrowing $500k if the rates drop to 3.00%

1st Home Buyers rates ( 10% deposit) 

Best deals this week.

ANZ

Fixed 4.29%, with scope for a lower rate if  85% LVR

Low equity fee (one off applies)

BNZ

90% LVR 

2 years 4.59% fixed

$2100.00 cash