In 2019, New Zealand mortgage rates reach a historic low as major banks offer sub-4% rates (one- or two-year fixed term rate of 3.99%). You might be wondering will New Zealand mortgage interest rates rise in 2019? Can I re-fix my mortgage if my current fixed term hasn’t expired yet? Many of our clients have saved a lot by re-fixing their loans at a much more competitive interest rate. So should you re-fix your loan to a one or two-year fixed term with lower interest rates? The answer is: it depends.

Video Timeline:

1. Your 2019 Update: New Zealand mortgage rates reach a historic low as major banks offer sub-4% rates – 00:55

2. Will New Zealand mortgage rates rise in 2019? – 01:49

3. Can I re-fix my mortgage if my current fixed term hasn’t expired yet? – 03:43

4. Should I break my loan? What should I consider when re-fixing? – 04:38

Should I fix my mortgage? Historical term deposit rates nz reached lowest - sub-4% rates

1. Your 2019 Update: New Zealand mortgage rates reach a historic low as major banks offer sub-4% rates

At the start of 2019, several banks introduced the lowest home loan fixed rate since late 2018. SBS, TSB and Cooperative Bank all launched a new sub 4% mortgage rate, quickly followed by New Zealand’s major banks - ANZ, Westpac and BNZ - who offered a one- or two-year fixed term rate of 3.99%, hitting the lowest point in mortgage rates history for this term. To remain competitive, other major banks cut some of their fixed mortgage rates too.

No doubt, when we look back at the history of New Zealand’s mortgage rates, people will ask questions like: What causes interest rates to change? Are New Zealand bank interest rates going to go up or down in 2019? What do we expect will happen in 2019 with New Zealand mortgage interest rates? 

2. Will New Zealand mortgage interest rates rise in 2019?

How long will New Zealand’s major banks keep offering sub 4% mortgage interest rates? The answer depends on the banks’ lending costs. After rising last year, they have fallen since the start of this year. New Zealand banks will raise their term deposit interest rates if they want to gather more fixed cash, which in turn will increase their lending costs. Banks will pass those costs on to borrowers. As a result, banks will increase their mortgage interest rates eventually.

What’s more, loan interest fixed rates are influenced by global factors such as the European debt crisis, which hit expectations for global growth. So, it’s hard to predict which way New Zealand interest rates will go in 2019.

But it’s still worth thinking about seizing this moment and re-fixing your home loan if your current fixed rates are over 4%.

3. Can I re-fix my mortgage if my current fixed term hasn’t expired yet?

Many people are unaware that fixed interest rates and mortgage fixed periods can be adjusted without waiting for their current fixed term to expire. You can re-fix your mortgage at any time. Most people do this at the end of their fixed loan term or two months before the expiry date. If you are doing this, you might need to reconsider your strategy as you may miss the most competitive fixed rates.

Technically, you can re-fix by yourself, but the process can be complicated, time-consuming, and involve a degree of analysis. We recommend you talk to a trusted and professional mortgage broker like us. If you want to break your fixed term loan and capture the current low interest fixed rates, we can calculate the bank one-off break cost fee, and help you balance the cost of the break fee against the savings you make in interest. Many of our clients have saved a lot by re-fixing their loans at a much more competitive interest rate, making the one-off break fee worthwhile.

4. Should I break my loan? What should I consider when re-fixing?

How long should you fix your mortgage for in New Zealand?

In recent years, we have seen a trend where the longer the fixed term, the higher the interest rate. So should you re-fix your loan to a one or two-year fixed term with lower interest rates? The answer is: it depends.

Let’s say your household income has reduced, as one of you quit their job to take care of your new baby. In this instance, you may need to find the lowest interest rate over the longest period. That rate won’t be the lowest on offer, but it will lock in a low rate over an extended period.

If your income will reduce, or your expenses increase, for a few years, choosing the short term with the lowest interest rates exposes you to the risk of interest rates increasing – maybe by a lot – after your loan expires. That could make life very hard for you.

 

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.

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To get your personalised mortgage plan sorted and to secure the best mortgage rate for you, get in touch with us today by calling 09 930 8999 or emailing: support@profin.co.nz

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