The Reserve Bank’s latest Official Cash Rate (OCR) announcement on 27th March 2019, left the OCR unchanged at 1.75%, however RBNZ has predicted the next movement will be down. This outcome has softened the New Zealand swap rates and suggests further easing of interest rates may come.
A lot of commentators, including myself, are predicting 1-year fixed rates as low as 3.50%, assuming the OCR does drop one or two times over the next 12 months. This may be counterbalanced if the Reserve Bank does increase capital for Australian-owned banks, however this wouldn’t affect the New Zealand-owned banks as much (Kiwibank, TSB, Co-op, SBS and Heartland) which may give them an advantage on pricing. If there is a change implemented, it will be considerably less for the New Zealand-owned banks.
We have already started to see discounted rates as low as 3.95% for 1-year fixed, making a future bottom rate of 3.50% not that unrealistic. Kiwibank has come out with the lowest (possibly ever) 5-year fixed rate at 4.29%, which is an outstanding offer. Remember however, long-term rates have danger if your personal circumstances change and you need to sell your home. Make sure to seek advice before locking in for a long period of time.
There is also some great news coming out of the non-bank market, with Resimac’s 80|80|80|80 deal available on owner-occupied properties and to modest investors, offering 4.46% fixed for a 2-year period. Softer terms mean there is growth within the market and this makes it easier for first-time investors to start their portfolio. If you are thinking of buying your first investment property, or perhaps you already own two or three properties in your portfolio, this could be a great opportunity. Our goal is to place you with the right lender for your situation, so give us a call to discuss your personal circumstances and see if this could be a great fit.
The New Zealand property market overall is quite soft at the moment. The auction clearance rate, in Auckland and Canterbury in particular, has been very poor as of late. However, Dunedin is bucking the trend and doing very well. The median sale price in Dunedin for February 2019 was $415,000, significantly higher than this time last year when the median was $370,870. An increase of almost 12%!
The number of property listings within Dunedin has also increased, which is providing lots of choice for potential buyers in the market. However, with properties only taking an average of 23 days to sell, there are still some buyers who are missing out. (Source: Nidd Property Report – March 2019)
To make sure you are in a prime position when looking to purchase a property, speak to Graeme Magorian, our Dunedin-based Mortgage Adviser and member of the OPIA Executive Committee. Graeme can help you work out what you can afford and obtain a pre-approval before you put in an offer. A pre-approval could make you look more appealing to the vendor. Give Graeme a call on 022 424 9695