Experts have discussed how borrowers can take advantage of low fixed rates to “really get ahead,” Newshub reports.
Mark Wilkshire, chief marketing officer at Kiwibank, said that New Zealand currently has some of the lowest mortgage rates ever seen in history – so people can “get ahead” if they would use their extra money to pay off their loan instead of spending it elsewhere.
“By putting interest savings back in [to the loan], the average customer has the opportunity to save $100,000 over a 25-year loan. For example, on the current [Kiwibank] two-year fixed rate of 3.65 percent, people are $100 per fortnight better off than they were a year ago," Wilkshire said, as reported by Newshub.
Even though not all borrowers can take advantage of the low rates, Wilkshire explained that putting extra cash in now when buying a home or coming off a fixed rate could result in significant savings in interest.
Read more: Broker advises homeowners to pay off debt faster while rates are low
Money experts have discussed how borrowers could manage their finances – information that brokers can share to their customers who are having a hard time paying their rates even as the rates dropped.
Lynda Moore, co-founder of Money Mentalist, emphasised the importance of fixed expenses and identifying frivolous spending, which could range from usual daily coffees and sales splurges to high-end pet food and toys, Uber, and Uber Eats.
She added that the best way to save is to move the money out of reach.
“The best way to stay focused on reaching a financial goal is to open a separate bank account. If you find it too easy to dip into it, open a savings account with a different bank and give the account a nickname that really resonates with you and your goal,” Moore explained.
Glenda Irwin, a mindfulness coach, said mindfulness can help people choose new habits. To start, she suggested that people mind-map what they value in financial stability and what it means to finally be financially independent.
“Take a 'big picture' look at why you want to knuckle down to financial literacy and identify any crossovers to other parts of your life. For example, it might make sense to forgo a coffee habit or reduce social spending for other reasons," Irwin explained.
“Think of each moment you spend being mindful as a penny, or dollar. Both your bank account and your most precious treasure - your mind - will benefit greatly from this approach.”