Current Interest Rates as at 05 July 2013 Variable 5.59% 1 Year Fixed 4.95% 2 Year Fixed 5.50% 3 Year Fixed 5.80% 5 Year Fixed 6.25% Interest Rate Outlook Is the end of low, low interest rates in sight? We, of course don’t know, but there are some signs that the worm might be starting to turn (& let’s face it, it has to at some stage). The environment over the last few years has been one of record low interest rates, both here and abroad. However in the USA we have seen Federal Reserve set out a timetable for winding down its government held low interest rates. This has seen wholesale interest rates for longer term rise which generally leads to retail rates following. The party is not over but the music looks like it is getting turned down… Locally, the economy has a firmer feel and you could label it as moving from recovery to expansion. There is now a lot of “ticks” in the positive side of the ledger, and momentum is becoming more self-fulfilling in response. Despite this we do not suggest getting carried away, we still have a number of head winds such as exchange rate risks that we need to look out for. Meanwhile housing supply shortages and the lowest mortgage interest rates in almost 50 years are underpinning a rising housing price market, but we are a little wary of a nationwide housing market lift given on going stretched household affordability. Given the high NZD, the RBNZ will shy away from raising the Official Cash Rate as long as possible. Rising residential investment activity and an additional 39,000 houses for Auckland over the next three years will eventually help reduce pressure on prices, but a nervous wait lies ahead. Variable Interest rates have not changed since our last communication; however, longer term wholesale interest rates have risen sharply in the past month, pushing 2, 3 & 5 year money upwards. Looking ahead, given the likelihood that rates will continue to rise, borrowers would do well to consider fixing. Fixing now means paying more, but it may work out cheaper in the long run. Selecting a term depends on how quickly you believe interest rates might rise versus one’s appetite for the extra cost. We favour a spread of terms, with an emphasis on 2 to 3 years as perhaps offering the best current value. As always please sit down with us though to discuss the option most relevant to your circumstances.
Posted on: Fri, 05 Jul 2013 04:38:10 +0000
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