APIA Blog

RSS Feed

Ryan Smuts: What investors need to know about the recent OCR cut

Tuesday, August 27, 2019

IMAGE CREDIT: UNSPLASH

 

The OCR has been cut recently by 0.5% - a lot higher than many economists were initially expecting.

What might this mean for the borrower? 

Over the last fortnight, we at the Kris Pedersen Mortgages team have seen some key effects come into play: across the market floating rates have dropped and in many cases, as much as 0.5%. Lenders like ASB for example took their floating rate down from 5.70% to 5.20% with others following suit. This means for those clients on floating rates their interest rates have just been reduced, and often when adding the floating discount that many banks offer, many Kiwis are now seeing their floating home loans as low as in the 4% point range.

Whether we will continue to see rates drop even further will be interesting, as some economists are still predicting one more OCR cut later this year.

So, generally speaking, if you are in the market for a home loan, what should you be looking at?

If you don't have a discount from your bank on your floating rate (standard floating, or otherwise - offset/revolving credit, etc.) then it's worth asking for one. Most lenders on standard residential mortgages are offering 0.25-0.65% off their floating rates just for asking the question, and we've even seen some discounts significantly higher than that.

At the moment it is a great time to review your current fixed rates to determine if you have the best of what the market has to offer. It makes sense to run an analysis on whether it is worthwhile to break and re-fix your mortgages. With how low rates are, in many cases we're seeing clients achieving substantial savings simply by paying the break cost to get onto a lower rate.  The KPM team offers this service for free. Get in touch and we will be happy to help. 

When you borrow to buy a house (home or investment), it makes sense to minimise any financing costs as much as possible so that you end up with more surplus funds to allocate how you like. It is a great time to be adding to your investment portfolio seeing that debt is at the cheap side making holding more affordable. Additionally, we are also seeing rent rising across several key regions. If you are not buying any properties in the short-term, it pays to re-evalaute your financing strategy to consider a more aggressive repayment plan while rates are still low. In the break and re-fix example above, you may reduce your interest rate and keep the same repayment amount, so more of your payments are going towards reducing the principal portion of your loan.

Keep an eye on the interest rate market, and particularly on your own interest rates to ensure you get ahead, and stay ahead.

 

 


ABOUT THE AUTHOR

Ryan Smuts 

Ryan is a Key Accounts Manager at Kris Pedersen Mortgages and Insurance. Ryan can be reached on 021 193 9333 or ryan@krispedersen.co.nz

 

 

 

 

 

Recent Posts


Tags

HHS personal growth commerce commission management fixed-term tenancy buyer's agent watercare inspection nzpif principal and interest investor trust investment strategy ventilation property management Kris Pedersen Mortgages and Insurance LIM clnz rent increase election2020 maintenance Level 4 property maintenance wealth creation trademe recycling equity structure meth contamination tenancy issues ring-fencing p lab television meth productivity business skill shortage cash-flow Property (Relationships) Act Case study equity DTI ird airbnb partners TCIT insulation unitary plan sublease CoreLogic damage house prices bond lvr letting minor dwelling barfoot and thompson HSWA property value subdivision Tribunal case study Holler yield interest rates data security ask an expert boarding house rta ocr mindset cat auckland education renovation rental wof smoke alarm off the plan anz heater scotney williams Jeff Bezos government tax warm up new zealand mortgage water bill bond form finance Q&A warren buffett khh RTAA 2019 Editor's Choice reserve bank Market report tenancy services capital gain housing affordability How to short-term rental return rent winz shower dome advice beginner investor development privacy holiday house Must know rental market banking tenancy tribunal parry v inglis opes partners negotiation Question and answer housing bubble market RBNZ landlord first home buying Standards New Zealand covid-19 worksafe insurance will property buying rules Landlording election 2017 relationship sale and purchas Sponsored post twg report wins gluckman report initio extractor fan HHGA robert kiyosaki Gluckman rta reform legal bad tenant financial advisers act tenant Investment tip Must knows market rent letting fee Investor story kiwibuild property apprentice positive cash flow rtaa2020 buying speculator heating property cycle income debt enforcement termination trespass interest only CCC building sale and purchase Guest blog cgt rent arrears auckland council asbestos

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited