The main banks are out with temporary mortgage relief packages in line with the 6 month “holiday” announced by the Government last week. This program is a JV between the RBNZ, retail Banks and the Government.
Options include taking interest only for 12 months ie: paying only the interest cost with no payments to reduce the amount of the loan.
Or a loan repayment deferral which involves no repayments at all for 6 months.
Make no mistake, this is no “Mortgage Holiday”.
Your loan amount will increase while your repayments are paused.
And the Lender will still charge interest on what you owe on your loan. This interest is added to your loan amount and they charge interest on that amount as normal.
Facilities are being put in place to temporarily assist customers facing cash flow issues.
Waiver of home loan application, top-up, and re-documentation fees (Early Repayment Adjustment fees still apply).
- Interest only repayments on home loans for up to 3 months.
- Home loan holiday for up to 3 months (interest will still be added to the loan).
- Ability to extend home loan term for up to 3 months.
This morning the Reserve Bank has slashed the Official Cash Rate by 0.75% to 0.25%. We have never been here before folks. Historic.
Floating interest rates and short term fixed interest rates should get a trim depending on how much of the margin main Banks don’t keep for themselves.
On one day back in late June 2016 when the UK voted for Brexit our 5 year swap rate fell by 7% to 2.32%.
With a global flight from equity to bond markets this week our 5 year swap rate stands at a meagre 0.77%.
Fixed interest rate falls beckon for mortgage holders.
The OCR was kept on hold today @ 1%.
The Monetary Policy Committee adopted a wait and see approach.
No changes to Bank lending rates at time of writing.
Merry Christmas to one and all.
A big thank you to long standing clients and lending partners.
Hope you all get to feel some warm sand between your toes. 🙂
HSBC has today slashed all its fixed home loan interest rates to 3.35%.
1 year fixed through to 5 years fixed are all 3.35%.
Today the Reserve Bank slashed the Official Cash Rate from 1.50% to 1%. This is the lowest rate in NZ’s history.
Swap rates which largely determine fixed interest rate pricing moved substancially. The 5 year swap rate declined by 11% to 1.06%.
Variable and fixed interest rates for borrowers should fall as a result depending on how much is passed on to borrowers by the Banks.
The Reserve Bank held the OCR at 1.50% today but cited “….weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives.”
The Reserve Bank has today cut the OCR from 1.75% to 1.50% citing “continuing house price softness in some areas” which means in Auckland.
It seems unlikely that the 4 main Banks will pass on the full 0.25% cut to their floating interest rate borrowers.