Industry experts anticipate another increase in less than two weeks
Mortgage advisers are monitoring RBNZ announcements closely after the official cash rate increased 0.25% to 1% on 23 February.
The RBNZ meets again on April 13 to announce its next official cash rate decision, with industry experts anticipating another increase in less than two weeks’ time.
Loan Market mortgage adviser Cameron Marcroft (pictured) said the rising interest rate environment has had a positive effect on advisers.
“More than ever clients are looking for specialised advice when it comes to their mortgage and seeking the benefit of an adviser negotiating to make sure clients receive the best interest rates available,” Marcroft said.
“Having an adviser on your team who is aware of the trends can help ensure you’re up to date with what’s going on but also makes sure clients have the best structure possible to pay off their mortgage faster.”
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Bloomberg News recently reported that mortgage rates were set to rise above 5% for the first time in seven years, damping economic growth and exerting further pressure on a cooling housing market.
The RBNZ’s monetary tightening has pushed mortgage rates significantly higher through 2021, with the two-year fixed rate rising 4.5% from less than 2.6% last year.
ASB economists expect the two-year rate to rise to 5.5% by the end of 2022, whilst Kiwibank economists predict rates between 5% and 6%. Most economists predict house prices will fall with both ANZ and BNZ now forecasting a 10% decline this year, Bloomberg reported.
For Kiwi homebuyers to standout in a competitive property market, Marcroft said buyers must have their finance approved well before they start to look for a property.
“It’s important to note that not all banks are created equal, meaning they all have different ways of calculating your maximum lending potential,” he said.
“By dealing with a mortgage adviser, buyers can get access to all lenders and really improve their chances of getting the best deal available in the market.”
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With interest rates rising, Marcroft said some investors were looking to sell due to the Labour government’s tax changes or to replace their existing properties with new builds as these are exempt from tax changes.
Marcroft said with inflationary pressures and rates expected to rise further, people would consider locking in their mortgages for a longer term to help with budgeting and certainty of repayments.
“We have definitely seen a downward trend in the property market in this first quarter and we would expect to see more of the same for the rest of 2022,” he noted.
