Home Loan Rates

Iwantahome.co.nz provides us with a useful summary of where Home Loan Rates may head.

• The Official Cash Rate has been cut drastically in 2008, and early 2009.
• Future cuts are expected, but they will be more modest in size.
• Mortgage rates have fallen substantially, and borrowers need to have a strategy to benefit.

Economic snapshot…a bleak pictureThe Reserve Bank (RBNZ) did it again, cutting the cash rate by 1.5% to 3.5% at their January 2009 Official Cash Rate (OCR) Review. The OCR is now at its lowest rate since it was introduced in 1999. The outsized cuts delivered over the last few months are bigger than we expected this time a year ago, but now can’t be labelled as that surprising given the run of bad economic news lately.

Households struggled with a number of challenges in 2008. Although the pressure on many household budgets has reduced as petrol prices and mortgage rates have declined from 2008’s record highs, the pressure is still on the broader NZ economy. NZ business confidence is dismal, reflecting an environment of falling activity, profitability, employment and investment.

The news from offshore is also gloomy. The economic outlook for New Zealand’s trading partner growth is the weakest in many years. Indeed, the RBNZ pointed to the deterioration in the world economic outlook, export outlook and the terms of trade for its decision to slash the OCR in January.

To read the full report, click here

This article has kindly been republished courtesy of iwantahome.co.nz.  To view this article and other news updates from iwantahome.co.nz click here.

Posted: 25 Feb 2009

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