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Interest rate cycles - got them working for you?


It is interesting to look at how interest or mortgage rates have evolved over the last few years. In March 2008 the two year fixed mortgage rate was around 9.75%p.a. Just currently that rate has been moved by many of our lenders to just 3.99% p.a.

The Reserve Bank commentary on the 27th March indicated that the “overnight cash rate” would be held at 1.75% but could well move downwards in the future. As an indicator of where lenders set mortgage rates this commentary gives a strong hint that our mortgage rates could also fall in the future.

If this is the case how can we take advantage of these falling rates?

At Thompson McNeill we’ve always opted for the shorter term view mainly because with the “instant” communication of today, economic events anywhere on the globe that affect interest rates can immediately translate to mortgage rate changes here.

In recent times we have found that when giving advice on fixed interest terms expiring we find that the new rates offered are often below those that are expiring. It therefore makes good sense to re-fix at the offered rate but keep our mortgage instalment the same. This means that we are taking the opportunity to pay more off our mortgage debt and so take advantage of falling rates.

There are many ways that we can take advantage of change to “drive our mortgages” so why not give us a call on (03) 281 8605 or email us on:

jerome@thompsonmcneill.co.nz

sandra@thompsonmcneill.co.nz


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