The fact that NZ Dollar remained quite stable even during global financial crisis and recession around the world allowed RBNZ to keep interest rates high for a long time. This naturally attracted foreign investors who enjoyed high yield from banks in NZ and their money helped in boosting the housing sector. RBNZ announced a reduction in the Official Cash Rate to around 2 percent citing falling inflation rate. This decision was prompted by several factors such as falling dairy incomes, continuing drought effects and exchange rates that were believed to be too high. RBNZ reduced the Official Cash Rate from 3.25% to 3% in June 2015 and it is believed that The Reserve Bank might announce another cut in the interest rates in the coming months. Economists predict that after this cut interest rates may remain stable till 2017.
Be patient if you are wishful of lower mortgage rates
Interest rates have been floating around 6% in different NZ banks for many years. They are attractive enough for all those wishful of building a home for their families. With recent cuts in interest rates announced by RBNZ, most of the banks in the country have announced a reduction in their fixed and variable mortgage rates. With a further cut expected to be announced by RBNZ in the next couple of months, it is certainly worthwhile for all those to fix for shorter periods at the moment to reap rewards of any further interest rate cuts.
This is certainly a good time for all the individuals who want to avail mortgage loans to own a property. If you have a good deposit, it is better to weigh your options before finalizing a home loan deal with your bank. You need to compare the home loan rates of different banks with your broker and see the best possible deal that you can get to keep your monthly repayments down. ANZ, Kiwibank, BNZ, and many other banks have already lowered their mortgage interest rates after RBNZ announced a cut to the official cash rate. But your broker can negotiate with banks to lower the interest rate in your case if you happen to have a strong application.