Now is a great time to borrow

7th November, 2009

If you are about to come off a fixed term loan and have good equity in your Tauranga home, it’s a great time to be a borrower. If you are due to renew shortly you should be able to expect to choose from some record low rates.  How long these rates remain low is subjective. Alan Bollard has consistently indicated that the official cash rate should remain firm at least until the end of 2009 and into 2010.

In recent weeks Mortgage rates have continued to remain steady with some of the major banks latest variable interest rates being at 5.75% with two-year fixed rates now at 6.65% - the last time rates were near these levels was around mid 2003.

However, it should be noted that with the gap closing in recent months between the Kiwi dollar and the US Dollar, our exporters, especially farmers, are really feeling the pinch. So, expect the unexpected that the current firm interest rates could be under pressure sooner than expected and could change direction.

Now’s the time to Buy or Sell

If you have been waiting for the right time to finally jump into the Tauranga real estate market, now might be the time to stand on the blocks and dive in to buying that investment property or new home.

The Stars are now in alignment, property prices appear to have bottomed out and in some area’s are now rising, Interest rates are at historically low levels and there is strong buyer demand – the time to act is now!

Handy Tips

If you are thinking of borrowing, refinancing or fixing a home loan, you will need to consider the following:

- Is refinancing the best option?

- Will I need to borrow more than 80% to purchase a property?

- In most cases you will require a registered valuation, these can cost from $500 upwards.

- It is always prudent to enlist a solicitor, budget at least $750.

- When selling, if this occurs before the expiry of your fixed term, you will most likely incur break fees.

- Factor into your mortgage repayment the unexpected, a rate increase.

- There is always potential for rates to rise quickly, especially if the current situation continues with the exchange rate between the Kiwi and US Dollar.