Call Us: 0800 800 590

Interest rates

Mortgage Calculator
Repayment Mortgage Calculator

Enter Your Details & Click the Calculate Button.

Loan Amount $
Annual Interest Rate %
Rate of Payment Monthly Fortnightly
Term of Loan Years
Number of Payments
Per Payment Amount $

Please note that the above is a guide only. Phone 0800-800-590 (7 days) for mortgage advice.

Current Interest Rates

Indicative rates current at 19 May 2022

 

Floating 5.45
Fixed 6 months 4.65
Fixed 1 year 4.55
Fixed 2 years 5.25
Fixed 3 years 5.49
Fixed 4 years 6.35
Fixed 5 years 6.45
Revolving Credit 5.45

For more information regarding interest rates phone 0800-800-590 (7 days) or email info@mortgagecare.co.nz

Price decline but not a rout  – 3 May 2022
This Commentary has been brought to you by the renowned New Zealand Economist, Tony Alexander:

Price decline but not a rout Each month I run five surveys aimed at delivering useful information on what is happening right at the coalface in the residential real estate sector as well as consumer spending and investment portfolio management. My most recent survey of mortgage advisers tells me that the credit crunch is easing.

Whereas in December a net 93% of advisers said that banks were becoming less willing to lend mortgage money, just two weeks ago a net 8% said that willingness to lend is improving. This is a positive development which will partly reflect the government’s plans to water down the more stringent requirements of the Credit Contracts and Consumer Finance Act.

It will also reflect banks no longer panicking about potentially breaching the rule since November that they cannot have more than 10% of new lending where the deposit is less than 20% of the property’s value.

But things are still much tighter than they were a year ago and what is more happening now is that demand from property buyers for mortgage money is still falling away. I can again tell that from my survey of mortgage advisers and also from my survey of real estate agents undertaken in conjunction with REINZ.

Agents still overwhelmingly say that they are seeing fewer investors and first home buyers and that few people are attending either auctions or open homes. A net 60% of agents also say that prices are falling in their location and only 6% say that they can see FOMO (fear of missing out) on the part of buyers. Back in October that proportion was 70%.

A record net 50% say they are receiving fewer enquiries from offshore, and a net 5% say that they are seeing fewer investors stepping forward to sell. That is consistent with one of my key points this past year. There is not and will not be a wave of investors placing their properties on the market because of things like rising interest rates, falling property prices, new rules for managing tenants, and tax changes.

Rents are rising strongly – by 10% according to one measure I follow – while construction costs which can ultimately underpin property prices continue to go higher and higher. There is weakness, volatility, and predictions of additional weakness in markets for alternative assets such as shares. Most investors are also in the for the long-term, many have no mortgage, and many others have only small mortgages especially when compared with their property’s current valuation as opposed to when they purchased it some years ago.

Nonetheless, even with buyers sitting back and investors holding on, could we still see some big falls in house prices? Further downside beckons in probably all locations around the country except maybe Queenstown. But without a wave of sellers, it is hard to see prices falling sharply. In that regard it is not just the absence of a wave of investors selling as already discussed, but the absence of owner-occupiers selling, primarily for two reasons.

First, unemployment is at record lows in New Zealand and job security is very high. This is a very different situation from past periods of weakness and housing stress when worries about incomes caused people to sell or downgrade their properties. That is unlikely to happen to any great degree this time around.

Second, the bulk of the rises in mortgage rates for terms of two years and beyond have already happened. Further small increases from here are likely as the policy tightening balls get rolling offshore. But we already have five year fixed mortgage rates almost 3% higher than just over a year ago and the one year rate over 2% higher.

These rates are driven by market expectations for where the Reserve Bank’s official cash rate will go and that means that as the cash rate rises, unless it goes much higher than expectations, we tend not to get much extra movement upward in bank lending rates.

For the record I remain of the view that the official cash rate – currently 1.5% – will peak at 3.0% and that implies perhaps another 1% going on the one-year fixed mortgage rate on average and less than 0.5% perhaps for the long-term rates.

One thing I continue to focus on is the result from my monthly Spending Plans Survey which shows a sharp decline in consumer spending intentions since the start of this year. This is important because the path of transmission of monetary policy tightening to reduced increases in business selling prices runs via consumer spending strength. Spending levels are already being reined in and money increasingly diverted to offshore travel.

This doesn’t mean inflation is about to suddenly track back below 3% from the current 6.9%. But it does mean the Reserve Bank will be reasonably confident that it is seeing things tracking the way they want and come the latter part of 2023 better supply chain functioning and economic restraint will likely see better inflation outcomes.

Therefore, I struggle to generate a scary scenario for borrowing costs in New Zealand, especially for anyone who has taken out a mortgage since the Global Financial Crisis and has had their repayment ability assessed at rates at and well above 6.5%. Very few people are likely to see their actual mortgage rate go above that level for any length of time this rates cycle.

Overall, we are still in the tightening phase of the monetary policy cycle, and this will add some extra weakness to house prices, especially as the supply of new builds grows firmly. But with high job security, rising construction costs, and rapidly rising rents bringing a desire by tenants to buy rather than keep renting, the extra price weakness to come from here is likely to be mild.

When the numbers eventually get added up, we could see average NZ house prices down by just over 10% from the late-2021 peak to whenever the trough occurs – perhaps late this year or early in 2023. Having said that, keep in mind that everyone from economists to real estate agents to politicians and members of the public has shown they cannot accurately predict what house prices will do.

Go to www.tonyalexander.nz to subscribe to his free weekly “Tony’s View” for easy to understand discussion of wider developments in the NZ economy, plus more on housing markets.

By Tony Alexander  (Market Commentary sourced from NZFSG Adviser Services, 3 May 2022)

Get in touch

Talk to one of our friendly Financial Advisers about any mortgage finance situation, 7 days a week.

CallCall 0800-800-590