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New Zealand Home Loans was pleased to sponsor the annual New Zealand Home Loans Round the Bridges event in Hamilton this year. The event saw over 4,400 people (and pets) of all ages participating in a 6km or 12km walk or run around the scenic Waikato River. There was even a special event for the kids, a 2km run down the main street of Hamilton.

The event ran without a hitch and the organisers were very pleased with the huge turnout.

Round the Bridges is one of the oldest annually contested events in New Zealand. The event began in 1945 (at the end of WWII) when the Hamilton Harrier Club established a road running race to enable Hamilton residents to witness top New Zealand athletes in action.

Mark Collins, CEO New Zealand Home Loans, discusses the impact of the International monetary crisis and NZ OCR has on New Zealanders.
Click here to see Marks video

A lot of people have been asking us lately whether they should be fixing or floating. Here’s some advice from our CEO, Mark Collins on the subject.

Click here to see the video: To Fix or To Float

To Fix or Not to Fix – Is That The Question?

There has been much media comment in recent weeks about home loan interest rates in New Zealand.  Fuelling speculation has been the ‘down-to-the-wire’ negotiations in the United States to ensure the world’s largest economy didn’t default on its debt repayments for the first time in history.  This in turn drove up the NZ$ to record highs.  Some economists in New Zealand called for Reserve Bank intervention to drive the dollar down.    All this uncertainty and speculation has resulted in recent increases in fixed interest rates and a scramble by New Zealand home owners to start fixing in case rates continue to rise.

The question New Zealand home owners are asking is “is fixing the right thing for me to do in my current financial position?”  There are certainly some advantages to a fixed rate, e.g. the certainty of the repayments in this difficult economic environment.  However there are disadvantages; you are unable to repay additional funds off your mortgage and if you want to break a fixed loan, penalty fees in the form of break costs may apply. 

On the other hand there are advantages and disadvantages to floating rates.  The advantages are you have flexibility to increase your repayment amounts to reduce your debt quicker, and if you wish to change banks or sell your home, you will not incur fixed rate break costs.  The disadvantage is that you are not protected by rate increases which always seem to be applied much faster than a rate reduction.

Often a combination of fixed and floating is the most appropriate.  An option could be to keep on a floating rate the amount you believe you can repay in the shorter term - say the next 1-to 2-years, and fix the rest for a term to correspond with your short term repayment ability.   This provides a degree of certainty and the flexibility to make progress on reducing your mortgage.  Because the question New Zealand home owners should be asking is “how quickly can I repay my mortgage?”

A historical analysis of interest rates can be seen to the right and as a general rule it would be wise to fix any term at a rate below the lower quartile red line.  At present, the 12-and 24-month rates look to be the most favourable compared to their long term averages.

New Zealand Home Loans believe it’s not the rate you pay on your mortgage, but the rate you pay your mortgage off that will have the greatest impact on your current and future financial position.   Beware the media and marketing economist with their ‘broad brush’ approach to financial statements.  The best person to provide you with advice is someone who knows your financial position and your financial goals in detail and who understands what you want to achieve with your mortgage. 

To find out how quickly you can repay your mortgage or to discuss what the best mortgage structure for you right now is, contact New Zealand Home Loans today. 

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