Fix or float .... mortgage
 

Here's a really good article on the merits of fixing or floating mortgages with imminent increase(s) to interest rates over the coming months.

http://www.nzherald.co.nz/business/n...ectid=11212246

Re: Fix or float .... mortgage
 

Even when the real economy coughs, the housing bubble collapses forcing RBNZ to apply a ZIRP policy and depositors pull their funds from the big four banks who have ever increasing exposure to housing debt causing a bank run because there is no depositors guarantee scheme in New Zealand and due to the collapsing NZD value money pours back abroad? ;)

Still a broken clock is only right twice a day, right?

Re: Fix or float .... mortgage
 

This is an excellent quote.


When we took out our mortgage in August just gone we wanted to see how thing were going to go and wanted a keep a bit of stability in our outgoing and so fixed it at 5.4% with ASB for 24 months.

A fixed 24 month mortgage with ASB is (as of Friday) 6.29%, so it's climbed quite a bit in just over 6 months.

Just a bit of info for you really. I'm not trying to suggest anything either way.

Re: Fix or float .... mortgage
 

I see the base rate has risen as expected. At a very basic explanation level, you could say it adds about $20 a week to every $100K you borrow? That soon adds up.

Also, did anyone see the recent quotes from the UK Bank of England that they are probably not going to unwind QE? What do we think of that?

Re: Fix or float .... mortgage
 

We have just bought a house (yay!) Still conditional at the moment though. If it all goes through we will be fixing $320k of the mortgage for three years and having the remaining $40k as floating. And then chuck as much money at it as we can manage (whilst still having a life of course :D )

Re: Fix or float .... mortgage
 

From what I've heard/read this morning, it adds that $20 a week per $100K of mortgage for every 1% rise in the interest rate - so far it has only risen 0.25%. It is predicted to rise by another 1% by the end of this year though.

Re: Fix or float .... mortgage
 

We are only two weeks away from completion on a low equity mortgage with ANZ. We are only putting down a 10% deposit which means a different (read higher) set of rates for us.

They offered us a deal with a 0.25% discount on their low equity rates though.

I'm thinking fixing for 3 years which would be at a rate of 6.9%.

2 years would be at 6.54 but im not sure that would be enough time for the market to do its thing.

I like the idea of leaving some on floating though, we hadn't considered that. A topic for discussion tonight as we are looking to get some paperwork signed tomorrow to lock something in before ANZ raise their rates following today's announcement.

Re: Fix or float .... mortgage
 

Yes, definitely rate lock. We looked into it but it's too risky for us as our property is not unconditional yet. BNZ charge a $500 bond for rate locking that is returned only if the sale goes through. We probably wont be unconditional for another week.

The mixture of fixed and floating is a good idea. I don't like the thought of not being able to pay off bigger chunks of money of our mortgage if we are doing well for money on a particular month. We talked to the bank about it and they were pretty good at explaining it all thoroughly (which is good for me seeing as my brain goes to sleep when numbers are involved!!)

Good luck with it all Madao. It's easy to get caught up in interest rates, building reports, types of mortgages etc and forget that you've actually BOUGHT A HOUSE! Exciting times :D

Re: Fix or float .... mortgage
 

We just refixed with westpac at 6% for three years.
That was on Wednesday.
We also have a small portion floating

Re: Fix or float .... mortgage
 

Always a good idea to check with the bank to see if you can overpay even if on fixed. We are on 100% fixed rate with Westpac but they allow us to increase our payments by up to 20% without charging us for doing so - so we can overpay without having anything on floating.

We are fixed on a lowish rate till October so hoping the rates don't jump too much before August/September when we will be able to refix.

Re: Fix or float .... mortgage
 

Some will allow one off payments without penalty as well but it depends on the back room stuff (so check next time you fix).

With some banks the increased repayment amount is nominal on a per loan basis so if you can get a free fix (which, unless you are getting more than about 0.5% discount on the carded rate, it should be free to fix) it's often worth splitting the mortgage down into smaller blocks to give yourself better future repayment flexibility.

Re: Fix or float .... mortgage
 

Yes.

Re: Fix or float .... mortgage
 

Weve decided to fix for 3 years with BNZ, pays to haggle.

Re: Fix or float .... mortgage
 

Always.

A mortgage is the biggest ticket item most of us will ever spend our hard earned on.

You save yourself literally $1,000's through a life time of repayments if you haggle each and every time you go through the mortgage rigmarole.

Negotiating a decimal percentage less than the advertised rates saves heaps over time.

I know the comparing and playing one off on another is time consuming but it's worth doing the maths to make that time tangible.

By doing this, I know I saved $2,500 over the 2 years of my fixed rate, extrapolate this over the 30 year term and you're looking at $37,500 - not an insignificant amount of money.

You can do further analysis, if you're so inclined. I did some workings to estimate that I spent roughly 30-35 hours making calls, attending meetings with mortgage advisers, etc (getting close to a work week!!) so, in a roundabout way, I earned $70 an hour by doing this [$2,500 / 35 hours = $71.40 (Swedish rounding)].

If I got offered a full time job paying $70 an hour, I'd more than likely take it. I presume most people here would at least strongly consider it ...

Re: Fix or float .... mortgage
 

So, we did manage to lock in a rate and we did complete on the house today.

We also seem to have ended up on a 3 year fixed rate of 6.4% instead of the 6.9% we were expecting. :sneaky::thumbsup:

Looks like rather than charge us the low equity rates we have been given their standard rate and still received the further 0.25% discount they offered us on top too.

Re: Fix or float .... mortgage
 

Nice work.

Based on my borrowing value which is approx $330,000 this 0.5% would save $109 a month, which pretty much equates to my saving of $2,500 over 24 months.

As with most things that aren't everyday items, don't ever pay the price the price tag says it is.

Re: Fix or float .... mortgage
 

HI Tommyluck,
You appear very informed on this whole NZ mortgage lark! We were put in a difficult position by our dear friends at Westpac, too long a story, but we are now in a position to remortgage, just interested, as I fully intend to try to do this without a mortgage broker, on how receptive the banks were to haggling? Which ones did you approach?

Re: Fix or float .... mortgage
 

In the end we had ASB and ANZ in a head-to-head after others fell by the wayside for various reasons.

Of course every scenario is different and different mortgage providers will view particular circumstances differently. For instance ANZ wanted us to cancel our UK credit cards even though we had a zero balance and they hadn't been used since we got to NZ.

ASB didn't even bother factoring in the very cards.

Cancelling was a hassle with the credit card providers I used in the UK - plus it's always useful to have a plan Z, when in dire need.

Anyway, in the end the ANZ and ASB went toe to toe on the rate, which was reduced from the advertised rate at the time with ASB.

They both also offered a $2,000 rebate for signing up. ANZ upped their initial offer $1,500.

When all was told and we'd drove the rate down as far as it they would go, they both matched each other on everything else, except the UK credit card palaver.

Therefore ASB won out, as is was less bother.

In essence both wanted the business and were willing to be flexible to win our business;

ASB because we also bank with them and want to keep as much of our business as possible.

ANZ because we banked with a key competitor and wanted at least something from us.

A key factor in this is that initially there were several mortgage providers willing to business with us even though neither me nor my wife had a job at the time, though we both had to prove we were looking and had had conversation with business, recruiters and the like.

So it was clear from the off that there was a reason they wanted our business, it was then up to us to gather as much information as possible to get the best deal.

You hold the cards, they want your business (within reason). It just depends on your time and inclination to use the factors at your disposal in order to go back and forth.

Re: Fix or float .... mortgage
 

Thank you, perhaps you are missing your calling..... TL brokers!!!!!!:thumbsup:

Re: Fix or float .... mortgage
 

Ha!!

As I said earlier in the thread, when you make it tangible - how many hours you put in v. how much money you're saving - it becomes a worthwhile, less stressful and more meaningful exercise.

Re: Fix or float .... mortgage
 

Walls Street Journal notes lenders are reducing their margins and not passing on increased financing costs: http://blogs.wsj.com/economics/2014/...all-with-rbnz/ . It'll be interesting to see where they have made efficiencies, I wonder have moves in the OCR increases made banks price risk at a lower rate as they feel the market has stability or if this is really chasing market share.

Also looks like BNZ are about to start a sub-prime lending scheme with government backing.

Re: Fix or float .... mortgage
 

Some speculation RBNZ may reduce LVR limits tomorrow and of course probably hike rates slightly now some commodity prices have weakened. There appears to have been very little slowing of house prices to date, rate rises have been slow and the improving outlook banks have (because they may have felt LVR and rates mitigated risk) have not has to pass on rises in full.