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Home Loans Today Interest Rate up date for December 2014

July 10, 2015 by · Leave a Comment 

Home Loans Today

Interest Rate up date December 2014
No Surprises
The last couple of months have seen no surprises in the property market.  The expected post-election rebound occurred coupled with seasonal increases in activity.

There have been cuts to fixed mortgage rates especially in the medium to longer terms giving increased certainty for borrowers.  In addition the Reserve Bank left the official cash rate at 3.5% on 11 December.  These factors, together with the decrease in petrol prices provide a favourable short term outlook for the consumer.

Whilst Auckland and Christchurch dominate in relation to percentage increases, it is good to see other provincial centres increase in value, reversing a previous trend.  In the year to October New Plymouth was up 3.5%, Nelson up 2.5% and Queenstown up 7.8%.

The Year Ahead
Reserve Bank governor Graeme Wheeler said that New Zealand’s growth was expected to
remain at or above trend through 2016, with unemployment rates dropping.  The outlook for the New Zealand economy appears to remain solid, supported by strong migration inflows.  Some predict that the OCR will remain unchanged over the next 12 months meaning floating mortgage interest rates look unattractive.

House Prices and Rental Yields
The increase in house prices have outpaced incomes and rents over recent years.  Back in the early 1990s, the median sales price of an existing home was equivalent to around 14 years of rental payments.  It is now around 24 years of rental payments.  Although rental yields have been declining since the early 1990’s, this has coincided with a shift to lower mortgage interest rates.

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