Mortgage rates are up (and likely to rise further)
Are you a first-home buyer or investor looking at making a property move? Or maybe, you already have a mortgage and your fixed rate is due to expire soon?
While interest rates remain historically low, they are heading upwards, despite the latest lockdown (with Auckland in level 4 for five weeks).
Here are some key things to know.
More banks push up interest rates
In September, ASB was the first bank to raise mortgage rates, followed by other major banks like ANZ, BNZ and Westpac.
What has been clear in the past few weeks is that, unlike last year’s nationwide Level 4 lockdown, during this lockdown there were fewer concerns about the NZ economy. “Every bit of data is showing that apart from lockdown, the economy is going really well. The Reserve Bank will be wanting to get on with hiking rates. Long-term rates have been feeling pressure for a while and it’s short-term now. My forecast models indicate this is what should be happening”, said ASB economist Chris Tennent-Brown.
For homeowners, Tennent-Brown added that while interest rate hikes are likely to see people spending more on mortgage repayments, the effect may not be felt immediately by most. Plus, when banks assess the ability of borrowers to service their home loans, they already take into account the possibility of interest rates increasing.
As for those looking to jump on the property ladder, rising mortgage rates and greater lending restrictions “should all work to cool the market over the year ahead”, according to REINZ chief executive, Jen Baird.
In sum, mortgage rates have troughed – and the only way is likely to be up.
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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.