In the past few weeks, New Zealand has experienced two extreme weather events - a cyclone and flooding - that have had a devastating impact on many families. Our thoughts go out to those who have been affected, and we hope that you and your loved ones are safe and well.

As a financial institution, we want to share some information on how banks may be able to assist those who have been affected by recent natural disasters. If your property has been damaged and tagged by the government in a yellow or red zone, some banks may offer a one-off allowance of several thousand dollars. Additionally, some banks offer temporary overdrafts with no application fees and no interest for 90 days. If you have a mortgage and are struggling with home loan repayments, some banks may offer their customers no interest repayments for 90 days or the option to switch to interest-only payments for a period of time.

It's important to note that each bank has different policies, so it's recommended to check their websites or contact them directly to get more details.

We also want to stress the importance of reviewing your home insurance policy regularly to ensure that your sum insured amount is up-to-date. In the past, we had a customer whose home was flooded and their business vehicle was damaged, resulting in significant financial costs. Unfortunately, the sum insured for their property had not been reviewed since they purchased it, which resulted in the insurance company claiming far less than the cost of rebuilding. We highly recommend that you review your insurance policy to avoid such financial losses in the future.

The recent natural disasters have also had an impact on New Zealand's economy, particularly on the farming and construction industries. With many farms severely damaged, the output of food, vegetables, and fruits has declined, which will likely result in higher food prices. Additionally, the construction industry, which had just recently recovered from previous setbacks, is now overloaded with reconstruction and repair work. If the industry cannot bring in labor in time, the construction costs may increase even further, which may contribute to inflation.

In order to control inflation, the Reserve Bank of New Zealand has raised OCR again. This will directly affect the interest rates on floating and short-term loans, so it's important to be extra careful when considering to refix your home loan. If your mortgage has been with your existing bank for more than 3-4 years, you may consider switching banks to receive a lower interest rate or cashback. However, keep in mind that there may be additional costs involved in switching banks, and it's important to weigh the pros and cons before making a decision.

We hope that this information has been helpful to those affected by the recent natural disasters in New Zealand. If you have any questions or concerns, please feel free to contact us for a free consultation.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.