Interest Rates

[Judge]

There is a lot of confusion here... there is no such thing as loan against property. There are loans and then there are securities. The ownership of security property has nothing to do with deduct ability of the interest on that loan. I can have my mother put her family home as security for my investment property but it will not make the mortgage on her house a deductible business expense. Rosco can probably explain this better than I can, but in my view Ivanp's analysis is incorrect.

[speights boy]

IF the RBNZ brings in a two tiered interest rate for Auckland, I would have expected it to focus on the purpose of what the borrowings were used for, not what property is used as security.
IE: Use your PPOR equity to buy a rental then it would be classified as an investor loan.

[Judge]

That is correct speights boy

[PTILoveYou]

So do you think that will be for home owners with a mortgage on the PPOR?

I have the feeling the rate will drop but after Oct 1st the rates will be where they are now at best for investors providing accommodation for people while they save for deposits on there first home...

There is no concrete proposal for that yet, so let's see what happens in the next few months.

[richard56]

Hi
So how low did the 5yr rates go before the Reserve Bank LAST put the OCR up?
Thanks
Richard

[Wayne]

Hi
So how low did the 5yr rates go before the Reserve Bank LAST put the OCR up?
Thanks
Richard

5yr rates shouldn't be driven by the OCR which, after all, is a daily rate.

[richard56]

5yr rates shouldn't be driven by the OCR which, after all, is a daily rate.

Hi
Ok how about...How low did the 5yr rate get between 2011 and today?
Thanks
Richard

[Wayne]

Hi
Ok how about...How low did the 5yr rate get between 2011 and today?
Thanks
Richard

Currently at it's lowest but have a look here

http://www.interest.co.nz/charts/interest-rates/mortgage-rates

prior to OCR increases starting Feb 2014 the lowest was 6.29 in June 2013 (at that point the OCR was a constant 2.5%
and shows no relationship between OCR and 5yr rates.

[donthatetheplayer]

Hi
Ok how about...How low did the 5yr rate get between 2011 and today?
Thanks
Richard

Not sure the lowest richard but I locked in for 5 years at 5.39%. I think that was pretty close to the lowest.

[quebec]

$487000.00 loan fixed for 1 year @5.19% on 31st May. Break cost as of today is $2100.00. Might be able to re fix as of today for 4.7 or 4.8% for 6 months or a year. Or float @5.8% till rates drop further. Bank happy to add the break cost to cash rate and sign a 2 year lock period which I already have when I fixed in May and got the cash back. Can someone do the maths and advise if it's worth breaking or let it go as is? Thanks

[PTILoveYou]

$487000.00 loan fixed for 1 year @5.19% on 31st May. Break cost as of today is $2100.00. Might be able to re fix as of today for 4.7 or 4.8% for 6 months or a year. Or float @5.8% till rates drop further. Bank happy to add the break cost to cash rate and sign a 2 year lock period which I already have when I fixed in May and got the cash back. Can someone do the maths and advise if it's worth breaking or let it go as is? Thanks

Why not ask another bank to refinance your loan to, and pay you the break cost plus change?

Then use this and negotiate your existing bank to pay you the same cashback to cover the breakfee, so you save on lawyer fees to stay?

[SleepyTiger]

I locked around 5.18% for 5 years just 2 month ago.......i kinda want to break it...

[PTILoveYou]

I locked around 5.18% for 5 years just 2 month ago.......i kinda want to break it...

Ouch, the break fee will be enormous!!!

[Bluekiwi]

I locked around 5.18% for 5 years just 2 month ago.......i kinda want to break it...

No you dont, that was good for the time, and not far from where I was.
And the OCR cuts this year will only steepen the curve they wont affect the 5 year rate too much.

That is controlled more by the US situation.

He look at like this, about 2 or 3 years you would have killed for a 5 year rate even close to 6.25%

[Wayne]

$487000.00 loan fixed for 1 year @5.19% on 31st May. Break cost as of today is $2100.00. Might be able to re fix as of today for 4.7 or 4.8% for 6 months or a year. Or float @5.8% till rates drop further. Bank happy to add the break cost to cash rate and sign a 2 year lock period which I already have when I fixed in May and got the cash back. Can someone do the maths and advise if it's worth breaking or let it go as is? Thanks

Maybe you should just leave it - otherwise you will go through the same exercise in another few months.
You only have 10 months to go.
Your savings potentially are $1800 and it will cost you $2100 to get that.
Just stop looking now until close to when your term expires or you will just keep chewing yourself up.