SPEAKER_02: 0:10

Hello and welcome back to that Homlon Hub. I am joined by James. Hello, James.

SPEAKER_00: 0:15

Maurina. You did that last time. I know, but I did it with more style. But you can't see my hand gestures.

SPEAKER_01: 0:21

I don't think people can see you.

SPEAKER_00: 0:23

I'm doing it just for you.

SPEAKER_01: 0:24

Oh, thank you. I appreciate it. Well, you put me in a good mood straight away. So, what are we talking about today?

SPEAKER_00: 0:28

Uh long-term rates.

SPEAKER_02: 0:30

Long-term rates. We're talking about home loan rates.

SPEAKER_00: 0:34

Absolutely.

SPEAKER_02: 0:35

Council rates.

SPEAKER_00: 0:36

Well, they're going up, aren't they?

SPEAKER_02: 0:38

Wouldn't that be cool to fix council rates and then you know how much you pay for like duration of your mortgage?

SPEAKER_00: 0:44

Hey, we should run for me. How cool would that be? Like some great ideas.

SPEAKER_02: 0:48

If you buy a house, you fix your rates, and that's what it's gonna be. And every time you sell a house, buy a new house, the rates could go up, but that's the only time it goes up.

SPEAKER_00: 0:56

Yeah.

SPEAKER_02: 0:57

Genius. Wow. I just made it up on the spot. I don't think the government will like me for that. But let's talk about home loan rates. What are the rates doing at the moment?

SPEAKER_00: 1:07

Okay, well, it's pretty interesting because we just had a massive, well, what would usually be called a massive 50 basis point cut uh with the OCR by the Reserve Bank last week. Wasn't entirely unexpected. Um so what people might have expected is that that would have brought down all the home loan interest rates. However, all what it's done is mostly affected the floating rate, the flexible rate, and the um the short-term fixed rate, say the six months year, two years. But your four and five year rates have largely stayed the same.

SPEAKER_02: 1:44

Remember, they dropped them right before the OCR, like a week before the OCR, all the rates come down. Yeah. But they haven't shifted since then.

SPEAKER_00: 1:51

No, that's right. So so because we're seeing those lower rates sort of fall a little bit more than what the the the higher rates, we're we're probably getting pretty close to where fixed long-term fixed rates, those four and five year term rates, are not have trough's where they're not going to get any lower. Is trough the word?

SPEAKER_02: 2:08

I don't know. I'm pretty sure it is. English is my third language.

SPEAKER_00: 2:11

You just put ED on the end of it and it becomes a word. Um it's troughed. And and therefore you might not see any further reductions in those four. You might get a smidge in more out of those four and four-year and five-year rates. So if you're thinking long term, and I've got a couple of clients that that want a lock-in for the long term. And if you think five percent for five years or just over five percent, I mean that's pretty awesome.

SPEAKER_02: 2:37

Yeah.

SPEAKER_00: 2:37

Um, just don't compare it to that period during COVID when they went down to what three and a half or six.

SPEAKER_02: 2:44

Yeah, 2.99, I think I've seen some coming off at the moment.

SPEAKER_00: 2:47

Yeah, so whenever we're talking relative uh, you know, comparing, I think it's a good idea just to ignore the whole COVID period because it's not really a normal period of our history. Um, so five percent's pretty good. I know he I know this client is really keen on locking in five percent. Um, I said we'd wait until after the OCR announcement. Yeah at the OCR announcement, they basically said, you know, things are pretty tough out there, confidence is low, that's what we're gonna do, the 50 basis point cut. However, um, and then they may still do another 25 basis cut, uh quarter, quarter of a percent basis cut in November. I think that's probably what I'm gonna do. I'm putting my money on that.

SPEAKER_02: 3:27

But to be honest, I really got this gut feeling that we're gonna hit below 4% for short-term rates. Yeah, so I'm seeing 3.99 before the end of the year.

SPEAKER_00: 3:37

Yeah.

SPEAKER_02: 3:38

What are your thoughts on that?

SPEAKER_00: 3:39

Yeah, I just I guess what I I I love certainty. So I I from a if I was thinking from my own point of view, I probably I'm more interested in locking in a rate that I know is really good for a long period. Um but probably if I had clients for my clients, I would be seriously considering that um the the f going on the floating until you're absolutely confident that that long-term rate is at its lowest. Because I'm just a bit worried about the six this the six month and the one year rate, because six months a lot can happen in six months, um, and you might find yourself coming back and say, well let's say not six months, but in a year's time, those those uh interest rates might have changed quite a bit in one year. Maybe not six months, but in a year's time, and you could end up paying uh overall a higher interest rate than what you would like in in a year's time. So I guess I uh I would tend to look at the conservative side of things. No, I can get a pretty low, low rate before the end of this year. Yeah. Not saying lock it in now, but you know, before the end of the year. Um because as soon as things do start to pick up and there are some slight um some little green shoots, as they say, beginning to appear, except in Wellington. Um and then once that happens, we can't we won't see any any further interest rate cuts. They'll probably start going up.

SPEAKER_02: 5:06

Wow, that's interesting. And also it's gonna be interesting to see what the new um reserve bank governor will do, right?

SPEAKER_00: 5:13

Yeah.

SPEAKER_02: 5:13

Is it governor? It is. We call them governor.

SPEAKER_00: 5:15

Is it a governess? Is it governess, yeah. If it's a woman, it's a woman.

SPEAKER_02: 5:20

Yeah, yeah, yeah. So it'll be interesting to see because she starts on the first of December as well. Yeah. Um, yeah, so the next OCR review, I believe, is on the 26th of November.

SPEAKER_00: 5:30

Yeah, because it's every six weeks, eh?

SPEAKER_02: 5:32

So eight?

SPEAKER_00: 5:33

Six. Six. I'm pretty sure it's six, yeah, because it's weird, it's a weird number. It's not okay.

SPEAKER_02: 5:38

Yeah, so it's in November. But again, one one type um solution does not fit all. Everyone will have their own different ways of thinking, they will have the different goals that drive them. You know, some people might just want to fix for six months to a year to get them through this patch, and then maybe they will sell a house and move somewhere else. Um, so if you are looking to sell a house in the next wee while you know, don't lock in for five years because you might get hit with quite hefty break fees.

SPEAKER_00: 6:09

And that's the main disadvantage, isn't it? Exactly. It's a big risk.

SPEAKER_02: 6:12

Yeah. And then, but then if you, you know, if you're about to have a baby and you know you're not going to go back to work for until the baby's off to school. So you've got five years, for instance, then yeah, fixing for five years makes sense. So this is where the power of advisor comes into play because we can advise on those things. And it was really interesting. I had a client come through last week. She said that she wasn't happy with the mortgage advisor that she had.

SPEAKER_00: 6:35

It wasn't me, was it? No.

SPEAKER_02: 6:37

It was someone up in Auckland. It was someone up in Auckland and she wasn't getting um the service that you know she was looking for. And she she approached me and she said, Look, um, I've been following you, I've been listening to you. Could you just provide me with the structure advice? If I can't leave that advisor because he might charge me fees, could you just do the structure for me because I don't have the confidence that he will? And I said, No, I'm sorry, you know, we can't just do half, like because we only get paid if you get a mortgage and we don't charge fees. Um, then I said, I'll do it for free anyway. But without knowing her full situation, it's a bit hard to do those things. So um, yeah, so it's you know, make sure you are comfortable with the advisor that you're using early on in the process, and um, and it's a two-way street, you know. If you if you gel, you gel, and if you don't gel if something's weird, you know, call on that gut feeling.

SPEAKER_00: 7:28

I think I really love the way we do it, you know. That well, you're biased. Yeah, we just spend time, yeah. We spend a lot of time with the clients before we end up putting putting the actual application in so and you know, you learn so much in each um conversation that you have, um, you go into more and more depth, and and that's when you you kind of can give them some good practical advice um on what to do.

SPEAKER_02: 7:53

Exactly. Awesome. I'm just distracting James here, by the way.

SPEAKER_00: 7:56

And remember, I can't do two things at the same time, so I can't talk and smile.

SPEAKER_02: 8:01

Awesome, James. Thank you so much. I think it's a really good um episode for those that are thinking to go long term. Long term rates haven't really changed dramatically, but do seek out financial advice and you know, get advice that's appropriate to you and your circumstances. Thank you so much. Thank you. See ya.

unknown: 8:19

Bye.