The ripples of the awful Christchurch earthquake are beginning to be felt in the Home Loan Fixed Interest Rate market. ANZ and National Bank have cut the majority of their Home Loan Fixed Interest Rates, with their 1 year fixed rate now sitting at 5.95%.
Our expectation is that the other major banks will follow suit to some extent shortly. And indeed, as i type, Sovereign has also cut their home loan fixed interest rates.
90 Day Bank Bills have also declined to around 2.86% from in the region of 3.18%. This is telling you that “the market” is expecting a cut in the Official Cash Rate at the next Reserve Bank Announcement on the 10th of March. These 2 indicators are the major influence on your home loan floating interest rate and hence, a decline in this could also be on the cards.
If you have recently purchased a property and have yet to settle the transaction or have a home loan coming off its fixed interest rate in the near future, may we suggest you hold off making an interest rate decision until after the Reserve Bank Announcement. Everyone’s circumstances are different but waiting may well lead to a clearer understanding of the Reserve Banks approach to handling the economy in response to the crisis.(and possible flow on’s to home loan interest rates)
These recent actions provide one example, highlighted in our last blog, of why we would have been in no hurry to jump lenders for Kiwibanks (or any other Bank’s) recently advertised home loan “special” 1 year fixed interest rate of 6.15%, which lasted for 3 weeks. The Bank has recently commented that the promotion was “extremely successful”.
Successful for whom?