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
Money in Your Pocket: The Sweet Spot in Wellington's Housing Market
The financial landscape in New Zealand is shifting in fascinating ways following the recent 0.25% drop in the Official Cash Rate. After years of climbing interest rates and market uncertainty, we're witnessing a welcome change that's creating unique opportunities for homeowners, first-time buyers, and investors alike.
Six-month fixed interest rates have fallen below 5% for the first time in recent memory – a dramatic improvement from the 6.7% rates of just twelve months ago. For the average mortgage holder, this translates to approximately $120-180 monthly savings in repayments. But here's where it gets interesting: contrary to the typical economic pattern where falling interest rates drive property prices upward, we're seeing property values remain remarkably flat. This creates what we're calling a "sweet spot" in the market, particularly in regions like Wellington where property values dropped by a staggering 27%.
Smart investors are already capitalizing on this unusual market condition. We've seen clients purchasing properties in areas like Shannon for $550,000 that include additional dwellings on the same land, generating rental returns of around $850 – the kind of yield that has these investors immediately asking "can we buy another one?" While Auckland prices continue their upward trajectory, Wellington and surrounding regions present exceptional value for those willing to make calculated moves. However, not everyone benefits equally from these changes – term deposit holders face diminishing returns and may need to consider alternative investment strategies. Whether you're looking to enter the property market for the first time, considering an investment property, or simply wanting to refinance your existing mortgage, now might be the perfect time to make your move before the market shifts again. Connect with us to explore how these changes could benefit your financial future.
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Hello and welcome back to that Homeland Hub. I'm joined by Kunj. Hello, kunj, good morning, how are you? Wonderful, so good to have you back.
Speaker 2:Yeah, it's been a little wee while since we've done this podcast thing.
Speaker 1:I know We've been very busy. We were away traveling, we had lots happening, we had our annual conference, we did, we did, and we'll dive into what we've learned at the conference as well. Yeah, but today it's very important to talk about something that everyone always talks about O-C-R, yes, official cash rate. So we recently had a massive drop again. Well, not a massive one, but a drop nonetheless yeah. And it's the drop of 0.25, which had a follow on effect. Yes, let's dive into it.
Speaker 2:Yeah, well, was it the 20th of August? So what, three weeks? Two weeks ago, yeah, we had that 0.25 drop in the OCR. So obviously with that dropping we had a drop in interest rates. So finally we've seen the six-month rate at under 5%, which is great for those you know short fixed terms, because obviously these predictions of the OCR still dropping a couple more times this year. So I think we've got one due.
Speaker 1:I thought there was one this year and one next year that they're predicting to drop, hopefully, yeah, yeah, which is incredible because, if you think about it, this time last year we were sitting at about 6.7 for six months, yes, and now we're sitting at 4.99. Yeah, that's massive difference.
Speaker 2:It is really massive for a lot of homeowners or the ones that were on the 6% or things like that. They're actually, you know, for an average home loan you're getting back about $120 to $180 per month on the repayments. But if you've managed for the last year or two years on that, keep paying it because you'll see the savings on interest as well.
Speaker 1:Yeah, yeah, because it will save you like five years off your mortgage straight away if you keep the repayments the same. But I guess for a lot of people it's a welcomed relief because a lot of people Absolutely.
Speaker 2:Yeah, the struggle's real out there. We're all struggling and it's a good relief to see that homeowners will get some relief in that. But then it balances out with the increase. Of you know, our power bill has gone up, our insurances, our rates have gone up, so yeah, so it's a catch-22 on that side of things.
Speaker 1:Yeah but it's a welcomed relief. The rates are going down. There's a bit more positivity from our first-home buyers, especially because, for those that stayed away for the last year or two watching the rates climb up and seeing their friends struggle, yeah, they didn't want to. No, they didn't want to struggle. So now they're like, oh, actually, maybe things will improve, maybe we should jump on this ladder now. So we do encourage you highly to jump on the ladder and benefit from those low interest rates.
Speaker 2:Yeah, and I think we've also seen an up on our first home buyers and things coming through to us as well as advisors. We've seen a lot of inquiries coming through for our first home buyers, so they're coming out in the market with the lower interest rate and things. Historically, though, with interest rates coming down, you see house prices Go up, but They've actually flattened, which is actually Really good. So I think it's quite A Good time For our you know, first home buyers and things like that.
Speaker 1:To jump in, especially in the region that went Like Wellington region Was the worst.
Speaker 2:One of the worst. That was like 27% A drop in house prices.
Speaker 1:So, for those that are looking to invest and you're listening to me outside, because I see where you guys are listening from and big shout out to Auckland, so a lot of Aucklanders are listening, so, thank you, if you are in Auckland and you're looking to invest, hey, invest in our region, invest in Wellington. Auckland is going up, wellington is going down, so good time to be investing in this area because you can still get really good returns. Like we just had clients buy even outside of Wellington, like Shannon really random place but they spent $550,000 on this property and it's got another property on the same land and they're getting like $850 return in rent Wow.
Speaker 1:So there are some absolute nuggets of gold out there, and this client cracked me up because we've just signed their documents and they're going. Do you think we should buy another one? If we find another one, could we buy one more? Another? Gma, exactly, and that's the thing. Those that are willing to take the risk, those that are making the positives out of this OCR drops, are the ones that will benefit long term. Yeah, yeah.
Speaker 1:So really good point, conch. Thank you so much for that. Normally, when the OCR drops, the rates go down. Property prices go up. In this case, right now, the property prices haven't gone up yet. They're still flat, so you've got a fantastic opportunity to go out there and buy something Definitely a sweet spot right now.
Speaker 1:Awesome. But again, as usual with the OCR drops, the real losers are our term deposit holders. They're the ones that will see the drop in their term deposits and their savings, and they will be the ones looking for alternative investments. Correct, you are correct? Yeah, awesome, Well, thank you so much for that. This wraps up our episode on OCR. Thank you, thanks, bye, bye.
