Experts urge caution when approaching lower mortgage rates

by Duffie Osental15 Nov 2018

With interest rates at record lows, real estate experts are encouraging home buyers to seek out advice before taking the plunge on any mortgage scheme.

This is in light of announcements from ANZ and NBZ of new rates that go below 4%. ANZ, Westpac, and ASB currently offer 3.95% p.a. fixed for one year, while BNZ is offering 3.99% fixed for two years. HSBC has the lowest rate on offer at 3.85%.

Despite a positive buying environment, experts are warning home buyers to study how the loan will affect their finances in the long-run, according to TVNZ.

"From my point of view, it’s very important clients don’t just see a shiny rating in a bank and say that’s the right thing for me,” mortgage broker Kit Jackson told TVNZ.

"It’s really important to get some advice about what’s really going to benefit them over time in terms of savings and how much they actually pay on their home loan over the life of the loan."

"We’ve seen a really record run this year of rates falling over the second half of this year,” Nick Tuffley, chief economist at ASB, told TVNZ. “Now we’re actually starting to see some signs where the longer-term rates are being pushed up by pressures.”

Experts also warned homeowners who are currently on a fixed-term mortgage that paying a fee to break their existing loan to take advantage of lower rates might leave them worse off. 

However, those who have less than 60 days to go on their current loan might stand to gain from a lower rate offering.

"If you are close, it is worth having a look," Loan Market broker Karen Tatterson told the New Zealand Herald.

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