It’s the middle of the year and we’ve seen a massive increase in every fixed-rate term since January. The official cash rate (OCR) increased again in late May by another 0.50 per cent, and we’re expecting to see further increases to the same extent over the next few reviews, the first of which is in early July.

Given the fact there are further rate expectations for the remainder of the year, it seems we are likely to continually see fixed rates increasing, at least until the end of the year.

In addition there are high inflation statistics overseas. As other countries look to get this under control we are also likely to see further increases to our longer-term fixed rates (which are typically more affected by what happens offshore) due to quantitative tightening and rates being increased by central banks.

Rates On The Move

At the time of writing we’ve seen ANZ and BNZ move their rates the highest, with ANZ’s special rates now at 5.35 per cent, 5.80 per cent and 5.99 per cent for one, two and three years respectively.

Cash flow is important in general, but it is even more important in times when the market is unpredictable like it is now, so that borrowers aren’t forced into situations where they must sell properties at lower prices.

When it comes to mortgages the main two ways (ignoring interest deductibility as there is little control here) to improve cash flow is to review your interest rates and interest-only possibilities. When looking at the interest rate table you’ll see variances between some of what the New Zealand banks are offering and what the larger Aussie banks offer. As a result, we’re seeing more applications being sent to the smaller New Zealand banks due to price differential.

‘As always, one size does not fit all when it comes to mortgage strategy’

Good Advice

ANZ’s Blueprint to Build product is still around for borrowers building new property or buying new-builds, and is still likely to be the best in many cases for borrowers in this situation. However, as always, one size does not fit all when it comes to mortgage strategy, so it is worthwhile having a chat with a mortgage adviser to figure out what model might be best for you in the months and years ahead.