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Home Loans Today – October Report 2011

Home Loans Today Mortgage News October 2011

Current Interest Rates as at 5 September 2011
Variable                 5.60%
6 Month Fixed         5.60%
1 Year Fixed           5.75%
2 Year Fixed           6.20%
3 Year Fixed           6.70%
5 Year Fixed           7.40%

Interest Rate Outlook
Occasionally the tyranny of distance can be your friend and being a little isolated and removed from the debt crisis fallout in Europe is certainly a good thing at this juncture. However while activities in these larger markets do have an impact on our funding cost the severity of their impact is lessened. Nonetheless, the financial mess that is Europe is likely to see interest rates held at their current low levels here until first quarter of 2012.

Locally, while the property market remains flat it is being readied for a strong 2012 on the back of the Christchurch rebuild and we are already starting to see positive signs in the powerhouse Auckland market with well-priced houses moving very quickly.

Of course we are half way through one of the strongest economic spend booms of the past 5 years thanks to the oval ball, but this light relief really will be a temporary measure, however it does clearly add fuel to our positive growth.

As we enter the last quarter of 2011 we can’t see markets this year in Europe moving enough to put any pressure on interest rates internationally and therefore locally, as such we believe that it may not be until the end of first quarter or mid second quarter of 2012 before we see any movement in interest rates.

With the potential sting out of any interest rate rise for the immediate future we are reverting to our recommended strategy of early this year and suggest that the price of variable interest rate money at the moment is too good to pass up and with little risk over the next 6 months we should all enjoy the mid to high 5% interest rates currently available.

However, the above strategy does come with a caveat. You need to keep your eyes and ears open for when rates do start to move in 2012 as we are at current record lows and at some point in 2012 it will be wise to lock in for a period at these historically low rates.

What’s Hot
There is only heat on one thing at the moment, the mighty All Blacks, even non rugby followers cannot help but be caught up in the hype that is RWC and haven’t we as a country done ourselves proud, it is great to see how we have embraced the tournament – Go The AB’s!