The lowest rate in the market is now 4.45%. ASB is offering that for 18-months.

2 years ago their 18-month rate was 7.15%!

So in the last year ASB cut 2.7% of their 18-month rate.

That saves $198 a week on a $500k mortgage (if paying off over 30 years)

But, every time I think rates won’t fall more … they do. Here’s why 👇

Here’s why mortgage interest rates keep falling

The reason rates keep falling is simple, but sad. 

The economy is not doing so good. GDP fell 0.9% in the June quarter. 

That’s a bigger drop than most people expected. 

What’s the Reserve Bank to do? They cut The Official Cash Rate (OCR). And they cut hard. 

Just two weeks ago we got a double decker 0.5% cut. The Reserve Bank’s interest rate (OCR) fell from 3% to 2.5%. 

That flows through into the market and makes it cheaper for banks to lend money to you and me for our mortgages. 

Why does the Reserve Bank do that?

• When our mortgages get cheaper,
• We go out and spend more,
• That’s helps get the businesses and the economy going. 

Exactly what the Reserve Bank wants. 

But, will interest rates keep falling? Here’s what it’d take to get more cuts.

This is what it’d take to get even more interest rate cuts

Could mortgage interest rates fall even lower? 

Yes, and they probably will, a bit. Most commentators expect another OCR cut in November. 

As that gets closer banks will likely get their scissors out. 

What would it take to get some more big drops? 

We’d need to see more OCR cuts beyond what’s expected in November.

And for that to happen, we’d need some unexpectedly bad economic news. 

Something that will make the banks think that the Reserve Bank will need to cut even more to get the economy going.

Will we get more bad economic news? Time will tell.

How to get up to $4,000 (or more) from the bank

Even though mortgage rates are falling … the banks are still competing with each other.

So, they are handing out cash. 

If you take out a new mortgage (or switch banks) they will often give you a cashback. 

They put money in your bank account. And you can spend that on whatever you want. 

It’s typically 0.8-0.9% of the loan. 

So if you have a $500k loan that’s $4,000 - $4,500. 

There are some t’s and c’s. Not everyone can get it. Like: 

• you need to stick with the bank for 2-3 years (or you’ll have to pay some of it back), and
• you usually need a $200k+ loan, and
• have 20% equity in your property. 

On top of that, you have to pay a lawyer to move the mortgage from one bank to another.

But all up it could make you a couple of grand … just switching banks.

So if you’ve got an interest rate coming up for re-fix … and want to make some mortgage moves …

Let me know your situation.

I’ll come right back to you to see if my team can help.

Cheers,

Pete