Interest rates have been a hot topic over the past month with many financial institutions lowering their rate in line with the official cash rate cut (OCR). In fact some economists predict a “new record low for the OCR awaits”, based on the current balance of risks in the economy. They believe the next RBNZ cut will come in August, with rates then on hold at 1.25% until 2022.
If this is true then New Zealanders will certainly be presented with additional opportunities for borrowing money. Antonia Watson, ANZ Managing Director of retail and business banking said: “The current extreme low-interest rate environment not only represents an opportunity for new home buyers to enter the market but for existing home loan customers to pay off as much of their debt as possible.”
But interest rates don’t just affect home owners they also have an effect on deposit interest rates. Watson said it was concerned people might seek higher interest rates through riskier investments and savings options and that “Lower deposit interest rates will also be a concern for the elderly who rely on interest income in retirement.”
So what does this mean for me?
Home Owners
If you are a current homeowner with a fixed term interest rate it may well pay you to look into when these mature. You could find some great deals in the marketplace with many banks cutting their lending rates especially over a fixed term
New Home Owners
If you are looking to buy a new home then again the lower interest rates may help you get on the ladder a little easier, but don’t bite off more than you can chew because just as rates can come down they can also go up so make sure that whatever mortgage you take on it is sustainable even with market movements.
Deposit Accounts and Investments
If you have investments in a deposit account you may need to review what rates you are getting and where the best place is for your money. It may be wise to talk to a financial advisor as they are in the know with all the latest deals and will be able to show you various options that will make your money work harder.
With so much change happening in the marketplace it’s hard to know if you are making the most of the change in interest rates but if you are unsure or would just like a helping hand then reach out to us here at FDG. We have advisers that specialise in mortgage advice, investments and insurance so why not give us a call today and we can have a chat.