OCR holds at 2.50%

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5%, in a short statement Dr Bollard confirmed "For now it is appropriate for the OCR to remain at 2.5%".

"The domestic economy is showing signs of recovery...
"Housing market activity continues to increase...
"A recovery in building activity appears to be underway - as forecast...
"That recovery will strengthen as repairs and reconstruction in Canterbury pick up later in the year."

The main concern for the Reserve Bank appears to be offshore "the global outlook remains of concern. Near-term indicators have moderated and financial market sentiment is still fragile."

"The New Zealand dollar has stayed elevated despite recent falls in commodity prices. Should the exchange rate remain strong without anything else changing, the Bank would need to reassess the outlook for monetary policy settings."

But what we don't know is what that reassessment may involve - as previously indicated a longer period of no change to the OCR; or whether they would see a cut to the rate.

The next Monetary Policy and OCR rate annoucement is 14th June.

If you are interested in reading past announements and statements from the Reserve Bank click here

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If you want to speak with a mortgage adviser about your circumstances then click here to meet the Mortgage People team or freephone 0800 823 823

To fix or not to fix

We are certainly being asked that question time and time again at the moment and guess what we don’t have a crystal ball that gives us the answer so the next best thing to do is to weigh up your priorities and choose the rate and the term that best suits you. So with that in mind here are some things to ponder over...

WHY CHOOSE A FIXED RATE?

A fixed rate means you’ll know exactly what your repayments are and you can budget with certainty.

WHY CHOOSE A FLOATING RATE?

Right now floating rates are lower than fixed and the cheapest way to borrow money, but will they stay that way… probably not. They are also very flexible and allow extra or early repayment to be made without penalty.

WHAT CAN YOU AFFORD?

Think about that when planning your budget and also think about the impact of rate increases on your budget and lifestyle.

WHATS THE COST OF CERTAINTY?

It’s the difference between what you will pay on a fixed rate and what you are currently paying on floating.

WHAT ARE YOUR PLANS?

Your personal plans for the future can give you a clue as to what to do, for instance if you are likely to be in a position to make a lump sum payment against your mortgage then it’s better to stay floating on that portion SO here is something to consider “A SPLIT MORTGAGE” by splitting between fixed and floating you can strike a happy balance… talk to us!

THE ECONOMIC OUTLOOK here are the facts…

• In its January review, the Reserve Bank of New Zealand (RBNZ) held the Official Cash Rate (OCR) at 2.50%, as was expected.


• Increases in the OCR are largely dependent on the global outlook and specifically developments in Europe.


• With all the global uncertainty, at this stage the bank economists expect the RBNZ to put off any increase in the OCR until late 2012.


• It is widely expected that current floating rates will go up in line with expected OCR increases.


• By the end of next year it is expected that the floating mortgage rate will be about 1.5% higher than the current rate.
  

So, the table at the top is to help you decide on what to do and please feel free to call us for advice on splitting your mortgage...

freephone 0800 823 823 or click here to view our team

The views expressed in the above blog are those of the author as at the date of the blog and are based on information and sources believed but not warranted to be correct. Neither Mortgage People or the writer accepts any liability for any loss or damage whatsoever that may directly or indirectly result from any information or omission contained in this blog.

Mortgage Help

An article in today’s NZ Herald caught my eye it was about mortgagee sales and quoted the banking ombudsman Deborah Bartell’s who said that “complaints about mortgage finance had almost doubled since before the financial crisis”.

The thing we want to stress here to all existing home owners is that peoples circumstances change all the time, and sometimes without warning the unexpected happens like redundancy, so if you find yourself in this situation talk to your mortgage broker straight away - and let us see what we can do to help, in most situations there is a solution. This might involve us talking to the bank for you and restructuring your debt to give you some breathing space or it might involve refinancing your current mortgages to make the payments easier.

Mortgage People have honestly assisted many clients who have experienced difficulties sometimes just to give them the time they need to sell their property in an orderly fashion and not have the bank do it in a mortgagee sale situation where often the sale price is much less.

The other thing is that the 31st March has just rolled by and for self employed people that’s tax time, once again if you don’t have the funds available see us about a potential restructure of your mortgages the trick once again is to chat to us early not later when the penalties start to kick in!

If your debt - mortgage, personal loans, business loans, car loans, hire purchases; is compromising your lifestlye, then its time to take control and talk to a Mortgage People broker today - find out all your options.

freephone 0800 823 823 or email us - enquiries@mortgagepeople.co.nz

Written by Glenn Christie, Director - Mortgage People Ltd