That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
OCR Forecast: Cuts Coming?
Wondering what's next for New Zealand's Official Cash Rate and how it impacts your mortgage? In this revealing episode of Home Loan Hub, we unpack surprising forecasts about where interest rates are heading.
ANZ has taken a bold position, predicting three OCR cuts on the horizon - one each in August, November, and February. This perspective differs from other economic forecasts and could mean mortgage rates have further to fall. While banks have already factored some potential cuts into their current fixed rates, we explain why another 50 basis point drop could still be possible if these predictions prove accurate.
We dive into the current mortgage rate landscape, with six-month fixed rates at 5.24%, one-year at 4.89%, and two-year terms around 4.99%. But the real question isn't just about numbers - it's about what these rates mean for your unique situation. Through real-life examples, we illustrate why mortgage decisions shouldn't be made in isolation: from the new parents seeking five years of certainty to the couple with side income planning lump sum payments, every household needs a tailored approach.
This episode highlights why clicking a refix button online falls short compared to personalized mortgage advice. Even when break fees are involved, we demonstrate how refinancing can still achieve crucial goals like improving cash flow for families with young children. Your mortgage structure should support your life goals, not just chase the lowest rate.
Have questions about your mortgage options with potential OCR cuts on the horizon? Reach out to discuss your specific situation and discover strategies that align with your financial future.
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Hello and welcome back to that Home Loan Hub. If you are wondering what the OCR will do, this is the episode for you. Stay tuned. I've got James, my trusted sidekick, to Thank you, I'm a trusted sidekick. That's it, James. So what are you going to talk about today?
Speaker 2:Well, I had the great fortune to attend an ANZ webinar not so long ago and they've taken quite a different perspective to what they see in the economy and OCRs going forward. They actually feel it's their position that we might see three more interest rate cuts in the OCR by the Reserve Bank One in August, one in November, I think they said, and then one in February was their feeling at the moment, given the state of you know what's sort of going on in our economy in New Zealand economy.
Speaker 1:Exactly so we were hoping for a cut in the July one. That didn't happen. And they're saying okay, cool, maybe there'll be one in August, right? So we've got one coming up shortly and there is another few reviews later this year.
Speaker 2:Yeah, there's a gap, isn't there? But from November to February I think they don't do anything. Yeah, and then there's a big gap?
Speaker 1:Yeah, exactly. But what I'm also understanding is the banks already have pre-calculated the current rates and they already included those cuts potentially, but we don't know, so do you think the rates will move?
Speaker 2:I think those cuts, those moves are based on maybe one or two OCR cuts. I don't think they're factoring in the full three. If ANZNZ proves correct and there is three OCR cuts, I think you could still see a half a point move on the 50 basis point move on the interest rates that we're offering. But yeah, the rates are still getting pretty good right now, aren't they? I don't know how much further they can really fall.
Speaker 1:Because a lot of questions we get at the moment is should I fix a float? Should I fix for short term? Because the six-month rate actually is not that bad. It's 5.24 as of today for six months and we're looking at about 4.89 for about a year, and then we're looking at 4.92 or 9.99 for two years. So the rate's actually not that bad.
Speaker 2:No, it's awesome. I think what you would do knowing that an OCR cut is coming. If you were getting a mortgage right now, I think you'd go floating for at least a few weeks until you see what happens. It's not just the OCR cut. If they cut, it's the wording around, what they're saying going forward and whether there's going to be further cuts, because I mean, you'd know more about this than me. Is it worth going on a floating and just waiting to see what happens in August and then making a decision based on the monetary statement?
Speaker 1:Yeah, look, I mean, I often say to the clients if you're only a couple of weeks away from the next OCR, cut, just go on. Floating. A couple of weeks is not going to break the bank. However, if you're like months away from the OCR, cut. Definitely, you know, do something about it. But at the same time, when the clients do sit down with us, we look at the whole picture, right, we look at the goals, we look at what's coming, what's going, we look at, you know, their current position. Like, for instance, I had a couple they've just had a baby. Mother wants to stay home for at least five years and they just want to fix majority of it for five years. Yeah, because they just don't want to think about it.
Speaker 2:You need the certainty, hey, in that kind of situation, From another hand, I've got a young couple.
Speaker 1:They're both working. One has a side gig where he buys and sells cars, so he knows that he could make quite good cash by the end of the year. So he only wants to go for six months because he knows when the six months is up he can put 30 grand lump sum on it. So everyone's situation is different and this is why we can't stress it enough that clicking a button online, anyone can do that. When you come up for a refix, the banks are now so sophisticated that it sends you a message and it says choose your rate now and you can just click the button and you can choose whether you want to fix for six months, 12 months, et cetera. But you don't get that human piece of advice like you and I can provide that. People can actually sit down with us and we can go through the whole situation with them.
Speaker 2:And it doesn't cost them anything generally speaking, we're here. I mean we do get paid later on if they decide to get a mortgage. But we invest all that time in our customers and our clients to try and get you the best deal, which is, if you go straight to the bank, you'll get the best deal from that bank, but you won't get the best deal from all the banks to compare.
Speaker 1:For instance, at the moment we are exploring different scenarios for our couple where the break fee is quite significant for them because they're fixed for another year. However, their goal is to ease the cash flow. Right, they want to get a bit more cash flow back into their lives. They don't mind pushing the loans back to 30 years. They want to enjoy the time with their young children and, especially with the recent changes in their incomes, they feel like they're struggling a little bit. So, by refinancing them, adding that cash break fee sorry, the break fee for the fixed rate, adding it onto their loan, even on a different loan term, et cetera, they're still winning. Yeah, because we are addressing their goals of what's important to them. Of course, they can continue to stay with their current bank and pay higher rates, but that's not going to achieve what they're trying to achieve. Yeah, absolutely so. I think this is where the power of the financial advisor comes, and chat GPT can't help you there either.
Speaker 2:Well, I think you know, it's just good sounding out your own ideas, isn't it, to somebody talking them out loud, and then you can get some decent advice going forward.
Speaker 1:Yeah, exactly Now. Awesome, james. Thank you so much. So if just to recap, if you are concerned about your current rates and what the OCR will do, feel free to get in touch with us, but we're hoping we're going to see another cut or two later this year.
Speaker 2:Yep one in august and and see people slightly richer.
Speaker 1:Absolutely what they are now awesome. Thank you, james, see ya.
