Property Investment
1 min read
Here is your monthly plan-English interest rate update.
The longer-term interest rates went up this month.
The lowest 4-year and 5-year rates both increased by 0.20% compared to September.
However, the lowest 1-year rate in the market hasn't moved at all.
The OCR hasn’t gone up since the last time I sent out an update. So why are mortgage rates increasing?
Usually, when the Reserve Bank increases the OCR, mortgage rates tend to follow.
But something unusual is happening right now.
Much of the movement in fixed mortgage rates this year has been driven by the wholesale rates.
Think of the wholesale interest rates as what it costs the banks to borrow and lend to you and me for our mortgages.
And right now, they're going up based on what’s happening overseas. Things like bond yields increasing and inflation from higher oil prices.
So if it costs the banks more to lend us money, interest rates rise.Â
This is why the average negotiated mortgage rates have increased across every fixed term.Â
The biggest jump is in the 4-year rate, which has risen from 5.45% last month to 5.64%.
Remember, the banks might advertise one interest rate. Then, when you go to fix it on your app, they give you a lower rate.Â
It’s hard to see these as a normal borrower. So here are the average discounts my team at Opes Mortgages have negotiated this month:
There is some good news though.
Most major banks aren't forecasting mortgage rates to start running away from us.
ANZ expects the 1-year mortgage rate to rise to 5.4% in December, then reach 5.6% by June 2027.
After that, it expects rates to stay relatively steady through to March 2028.
That tells me much of the expected increases may already be priced into mortgage rates.
So, yes, we could see rates rise further over the next few months. But based on current forecasts, I'm not expecting huge jumps.
Not sure what to do with your mortgage, or got a scenario you want to run past me?
Hit reply, and let me know.
I'll come straight back to you.
Cheers,
Pete
Mortgage broker for over 10 years, property investor and Managing Director at Opes Mortgages
Peter Norris, a certified mortgage adviser with 10+ years of experience, serves as the Managing Director at Opes Mortgages. Having facilitated over $1.2 billion in lending for 2000+ clients, Peter is a respected authority in property financing. He's a frequent writer for Informed Investor Magazine and Property Investor Magazine, while also being recognized as BNZ Mortgage Adviser of the Year in 2018 and listed among NZ Adviser's top advisers in 2022, showcasing his expertise.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.Â
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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