Official Cash Rate unchanged at 1.75 percent
The Reserve Bank left the OCR rate unchanged in the latest announcement on 9th February. Governor Graeme Wheeler indicated that the rate of 1.75% may stay until 2020.
The 1 year swap rate is the same as mid –November, yet Bank rates have gone up. In addition, bank term deposit rates have not moved in recent times. The 5 year swap rate has gone up around 25 points since November, yet bank rates have increased close to 1% in the 5 year space. Doesn’t really figure does it?
The Banks will argue that the increase reflects the cost of overseas funds and the cost of holding more capital for investment loans. Has the cost of funds increased as the Banks say?
I do believe some of that will be true and fair. On the other hand, I feel a big reason will be, “ Volume down so margin up”. The profit target needs to be met somehow.
It is time to start thinking of the long term, even if you are currently locked in. Break fees may not be as much of a handbrake towards the goal of saving money and taking years off your mortgage debt. Give us a call to review your financial position and get a plan in place to meet your goals.