Today the Reserve Bank left the Official Cash Rate unchanged at 2.50%, and for the first time did not give any clues as to when it may need to rise - other than saying the rate is on hold "for now" and should there be increased pressure on domestic resources their will be "future" OCR increases.
Industry commentary noticed that this announcement was short and sharp compared to the past. What could be seen as pleasing from this, is that it now looks highly unlikely that we will see any change this year to the OCR and perhaps no increases for the first quarter of 2012... resulting in, one hopes, fairly stable home loan interest rates for the next 6 months.
The caution to all of this however is the heavy cloud hanging over the European sovereign debt crisis which could cause further slowing in global activity - the negative affect on us down under is an increase in NZ bank funding costs over the next year or so.
At home, domestic business confidence has been a see-saw and has fallen back somewhat to earlier this year. As Governor Bollard says, "domestic activity has continued to expand at only a modest pace". Inflation has settled near 2% being lower than expected.
What to do?
If your budget does not have much room to move and an increased loan repayment would put pressure on your household -
Industry commentary noticed that this announcement was short and sharp compared to the past. What could be seen as pleasing from this, is that it now looks highly unlikely that we will see any change this year to the OCR and perhaps no increases for the first quarter of 2012... resulting in, one hopes, fairly stable home loan interest rates for the next 6 months.
The caution to all of this however is the heavy cloud hanging over the European sovereign debt crisis which could cause further slowing in global activity - the negative affect on us down under is an increase in NZ bank funding costs over the next year or so.
At home, domestic business confidence has been a see-saw and has fallen back somewhat to earlier this year. As Governor Bollard says, "domestic activity has continued to expand at only a modest pace". Inflation has settled near 2% being lower than expected.
What to do?
If your budget does not have much room to move and an increased loan repayment would put pressure on your household -
- stay in touch with your mortgage broker or adviser;
- take note of information in the news and online;
- don't be afraid of asking "an expert" their opinion;
- understand your budget.
On the other hand, if you do have room in your budget to pay extra off your mortgage while interest rates are at an all time low - we'd recommend you definitely look at your options!
Look at this example:
Home Loan $350,000 at 6.5% over 25 years
If you pay an extra $150 each fortnight into you mortgage
You would shave 6 years off your mortgage term = which means saving $100,883 in interest !!
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