With the big NZ banks busier than ever and a rising number of mortgages being taken out the low interest rate mortgage bubble might be about to burst. So is now the time to break your mortgage and refix? You could end up saving hundreds (or thousands) of dollars a month.
It is a common belief that breaking a mortgage and paying a break fee is just too hard basket to consider, but that really isn’t the case. With your mortgage normally being your biggest monthly outgoing doesn’t it make sense to make it as small as possible? If someone offered you a few extra hundred dollars a month for doing exactly the same thing you already were you’d probably say yes right?
Recent media reports (Interest Rates Tipped to Rise – NZ Herald) are predicting that the historic low rates on our mortgages that homeowners have been enjoying may be about to come to an end. GDP data for the first quarter of the year has confirmed that the economy has burned off recession fears but now faces a new set of challenges as parts of the economy boom. The quarterly growth figure of 1.6 per cent was double that of the most optimistic market economists and while the grim second quarter of 2020 still leaves average annual growth in negative territory, on year on year measure we are 2.4 per cent ahead of where we started as the pandemic hit.
The strength of the numbers already has economists forecasting the Reserve Bank may have to bring forward interest rate hikes.
That means mortgage rates will likely rise.
The likelihood of interest rates rising by more than about 1.5 percentage points in the next three years looked fairly limited, but if rates shifted from 2.3 per cent to 4.3 per cent it could mean fortnightly hikes of $150 to $300 for homeowners. The same can be said in reverse, many people are still paying interest rates in the 3%’s and just waiting for the rate to expire. Why?? The best thing to do if you are in a fixed rate mortgage is to be proactive and look at what options you have.
At Money Compare we work with leading mortgage brokers to help you get the very best deal on your mortgage or home loan. Many banks are offering a refinancing package, or cashback deal, to cover some, or all, of the costs associated with switching banks, such as legal fees. So when was the last time you did a Mortgage Health Check and looked at your options? If it has been more than 12 months then it really is something you should investigate.
Check out the home loan rates that are currently available from all the major lenders on Money Compare. If there is a product that takes your fancy make a quick enquiry and one of the team with help you run a free of charge mortgage health check to see what you could save. We’ve got one case study, from Sarah, who SAVED $1,380.34 A MONTH! Check it out here.
There has never been a better time to refinance. With mortgage rates potentially soon to increase, these historic low levels won’t last forever.
Top tips when you are refinancing:
• Use an expert. Mortgage brokers are generally free of charge and know all the options available
• Shop around for the best rates, not all banks are offering the same rates and the same rates may come with different perks or benefits
• Find out what refinancing will cost – is there a break fee on your current mortgage or home loan?
• Calculate whether it is worth it. What is the tipping point? $200 a year or $2,000 a year. There’s money to be saved but balance that with time… or get someone to investigate for you
• Ask a mortgage broker to present you with 2 or 3 options.
• If you're able to keep your repayments the same or even higher, refinancing at a lower rate will enable you to pay off your home faster with less interest overall.
We now offer face to face mortgage health checks on site at our Auckland office Monday to Friday and can chat the options over the phone, on Zoom, Facetime or Skype 7 days a week.
When was the last time you did a Mortgage Health Check? Make a no obligation, free enquiry now and see if we can help you save.
