The heated mortgage battle amongst home loan providers could get even more interesting, as economists now believe the Official Cash Rate could be cut as soon as May or August 2019, and interest rates could start to fall in August this year. This follows comments made by the Reserve Bank of New Zealand at the end of March 2019. A home loan review could help you decide whether refinancing is the right option for you.

Weak growth in NZ and overseas
Towards the end of March 2019, the RBNZ announced that the next OCR move could be a downwards one due to weak growth both here in New Zealand and overseas.

“Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next overnight cash rate (OCR) move is down,” the RBNZ said in its March policy statement.

Leading economists now say interest rates could start to fall in August, having previously predicted a fall in November, and that interest rates are likely to remain at or below historic lows for some time to come.

Dominick Stephens, Economist at Westpac said, “We expect the RBNZ will cut the OCR to 1.50% in May 2019. There is a risk of a follow-up cut, but we think the RBNZ is more likely to hold off for the remainder of 2019. We have long been concerned about the economy slowing in the early 2020s. We now expect the RBNZ to react to that by cutting the OCR again in May 2020, to a new low of 1.25%.”

Get a slice of the savings
With interest rates continuing to fall, as a homeowner, now’s a good time to review your mortgage to see how you could potentially save on your interest rate. Before you go ahead and move to a new lender or rate though, there are a few things you should consider.

1. What are the costs involved?
Ending your existing contract too early could result in an early exit fee charged by your lender to recover the loss it suffers when you switch to a different home loan provider. This can add up to a hefty amount so it’s important you take this cost into consideration when deciding whether or not to move your home loan.

2. Could you renegotiate your existing rate?
Before moving to a new home loan provider, it may pay to get in touch with your mortgage adviser to discuss renegotiating your rate with your existing lender. Your mortgage adviser will have a good understanding of current rates and may be able to renegotiate on your behalf.

3. How much equity do you have in your home?
If you’re a new homeowner with less than 20 per cent equity in your home, you could be charged Lenders Mortgage Insurance to refinance which could prove expensive and may offset any savings in interest rate.

Before making any changes to your existing home loan, it’s worthwhile reviewing your mortgage. Talk to one of our mortgage advisers about a mortgage review to help you determine the best course of action for your financial situation. Our mortgage advisers also have access to a wide panel of lenders and can help you decide on the right lending options for your unique lifestyle and situation.

For more tips and advice around managing your money, consolidating your debts, or applying for finance, follow Mortgage Express on Facebook and Twitter, or contact one of our mortgage advisers.

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