NEW POLL ----->

Not rocket science......but who would you go with if you had to borrow today. Dont think about just price and dont be restricted by your current circumstances. Imagine that old aunty of yours finally kicked her clogs and gave you 20% deposit to buy a house.....who would you choose?!

Has the Horse Bolted?

Thats a good question Dave, yes it is Dave.....and one that i really dont know the answer too! Suffice to say that long term rates have as you will have observed shot up and our friends at the Reserve Bank arent too happy about it!

What i do know is that the rates landscape has changed and most now will give more than a passing glance at the floating rate when making their decisions on loan structure. Approximately 85% of all loans in NZ are fixed whereas across the Tasman the reverse is true.

At the moment clients are considering a split in their structures, some short some medium and some long.....perhaps a little bit on floating. The net result of this is some protection from rolling off a rate onto a bigger one, still have the certainty of fixed rate payments but also some ability to pay off principal as and when you wish to.

As a structure it may not be the cure all for everyone but it does cover most of the bases, a bit like taking a box trifecta in a three horse race.....you wont win much but you will win!

The Grinch Who Stole the Rates!

interest.co.nz describes it as March Madness and certainly rates have turned on their head and quickly. Suggested pressure on long term rates has turned into reality and the big increase are in those 3-5 year rates.

For prospective borrowers the main thing is that we can see competitive differences between the lenders open up and there are reasonable differences between lenders under certain rates.

So you can compare apples with apples decide how long you wish to fix for without considering price.....think about the factors that influence that....job security, the possibility of having kids and going down to one income, the liklihood of selling within a certain timeframe.....these factors are just as important as interest rate. And if its certainty you want then look to lock in long.

Then once you have decided that let's say those factors indicate a 2 year fixed rate........well then its not rocket science to consider anyone aside from ANZ National.

We'll always work with you to explore those options but dont ignore those lifestyle factors that can help us to determine the best options!

Rates again!

Well 5 year rates have moved again with the pressure on lenders margins forcing most up to the 6.75% mark. I read some interesting words from Matthew Gilligan on his blog which you can find on http://www.familytrusts.co.nz/blog/

Matthew is one of the partners at Gilligan Rowe and Associates, an Auckland based Chartered Accountancy practice, who provide full range accountancy servies but have specialised in advice for property investors.

As for me there is enough news out from the lenders to make me think that folks should consider seriously locking in long.

Rate Update

As suggested ASB have also dropped their variable rate to 6.4%. ANZ have also introduced a 3 month special of 5.65%.

On the other end of the scale ASB and Sovereign have increased their 3, 4 and 5 year rates leaving many borrowers in a quandry. A lot of borrowers are on floating rates waiting for the right time to hop onto a low low long term rate. This move by lenders may see a good number take what is on offer now.

I personally think that one of the big players will make some real cuts with a selected long term rate soon (or soonish) but wouldnt argue with any client who locked in at 5 years now.

OCR and rate update

Well the Mole was a bit hopeful with the Reserve Bank dropping the OCR by 50 points and making it clear that there is likely to be one more to go. It is also becoming clear that lenders are not going to pass much of this on beyond reducing their variable rate.

At this point ANZ and National have moved their floating rate down to 6.45% and Sovereign has dropped to 6.4%, meaning ASB will likely announce same in the next few hours.

OCR predictions

Hi everyone, well here's some thoughts from the Mole.....David can't be seen to be making predections on rates and that sort of thing so it's down to me to put my thingies on the line and give it a shot!

The Mole reckons that Mr Bollard will drop the OCR by 75 points and suggest in his brief that that could be the lot. But the Mole reckons that we'll see one more drop after that of around 25 points.

What will the banks do?

Big question that one.....Mole reckons they will drop an average of 50 points of the variable rate and then varying amounts (of around 20 points) off the 6 month through to 3 year rate with no change on their 4 and 5 year rates.

Big prediction will be that either one of Kiwibank or BNZ will see the opportunity to go hard out for market share and introduce a cut price 5 year rate that will knock everyone's socks off and force the other major lenders into another reduction in their long -term rates.

Well lets see what happens tomorrow and beyond.....

Ta ta for now

The Mole