Wholesale rates have dropped a bit, which has meant that banks feel more comfortable sharpening their pencils. Fixed rates have become softer and banks have become a bit more generous with cash presents. There seems to be a focus on growing market share which only means good things.
Cash backs
Focusing too much on the 1% cash backs does mean that you can lose sight of the effective interest rate. It is a good idea to work this into the equation and other associated costs. Costs which arise when switching banks can include lawyers fees, break fees and pay back of any prior cash backs.
Yes it can still be worth switching even when paying a break fee, however you do need to see all the benefits and costs. With the difference in interest rates factored in. We can arrange that on one simple page after gathering data from a couple of sources(old bank and possible new bank).
How much cash back could you get – check out our new calculator(spoiler alert its approx 1%)
Interest rates
Fixed rates have moved down somewhat with more movement on the longer fixed terms. It will be interesting to see how the RBNZ reacts to the easing of oil prices. Next OCR update in a week – 8th of July. On the last update, they changed their forecast for the OCR slightly higher quicker. If this is revised due to changes in oil prices impact on inflation, we might see some further changes on fixed rates.
In good position?
When you hold all the cards instead of the bank, it is the perfect time to tidy some things up. They key things we look at when considering a refinance include stretching the max home loan term. Seems counter intuitive, however this makes cashflow more resilient. A shorter term, hence less interest can still be achieved through optional repayments, over and above the minimum. This means that you retain the ability to drop repayments in the future should circumstances change. For example a gap in between jobs, higher interest rates etc.
Another thing we look at, is the client optimisation of any savings, these should be used to lower interest costs. So a refresher on home loan product features(offset/revolving) is at times warranted. Anyway I could keep going – multi property holders – we check if its time to split bank or freehold a property. Just book a call if you are still reading this far.
