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OCR Versus Swap Rates And What Actually Shifts Your Mortgage Rate · That Home Loan Hub

• 0:10
  SPEAKER_00: Welcome back to Cunch.
• 0:11
  SPEAKER_00: We're going to talk about whether the interest rates are going to go up or not.
• 0:15
  SPEAKER_00: Kioda.
• 0:16
  SPEAKER_00: So interest rates.
• 0:18
  SPEAKER_00: Every time you and I record an episode, something happens.
• 0:20
  SPEAKER_01: I know.
• 0:21
  SPEAKER_01: Well, we kind of missed the last OCR podcast recording, didn't we?
• 0:27
  SPEAKER_01: We got busy.
• 0:28
  SPEAKER_00: Yeah, but there's another one coming up.
• 0:30
  SPEAKER_00: And ANZ released that they're going to be increasing.
• 0:33
  SPEAKER_00: Well, they think OCR is going to get increased three times this year.
• 0:37
  SPEAKER_00: Even though initially they were saying five times this year, they dropped it down to three.
• 0:42
  SPEAKER_00: Three to five times.
• 0:44
  SPEAKER_00: So depends which economist you talk to.
• 0:48
  SPEAKER_00: Correct.
• 0:49
  SPEAKER_00: So three times for ANZ.
• 0:51
  SPEAKER_00: But the moment they've released that report, they actually increased the rates as well at the same time.
• 0:56
  SPEAKER_00: The wholesale rates went up.
• 0:57
  SPEAKER_00: Yeah.
• 0:58
  SPEAKER_00: And a lot of people don't realize that even the OCR won't change, the interest rates still may go up or down because it depends on the wholesale rates, swap rates.
• 1:09
  SPEAKER_01: Yeah, the swap rates, wholesale rates, basically the rates on what the banks borrow their money for.
• 1:14
  SPEAKER_01: Yeah.
• 1:15
  SPEAKER_01: Yeah.
• 1:15
  SPEAKER_01: So the banks still got to go and approach mostly overseas players and they have to buy it off them for X amount or right.
• 1:25
  SPEAKER_01: They obviously put their little margins on that as well.
• 1:30
  SPEAKER_01: And then they, you know, basically lend it out to us.
• 1:34
  SPEAKER_00: Yeah.
• 1:35
  SPEAKER_00: Correct.
• 1:36
  SPEAKER_00: So if you're sitting out there making your own bets whether the interest rates are gonna go up or down or whatever based on OCR, I would suggest you stop doing that.
• 1:45
  SPEAKER_00: Yeah, it's just not a one-stop thing that it's not a one-stop solution to the interest rate problem.
• 1:52
  SPEAKER_00: And the problem is inflation as well.
• 1:54
  SPEAKER_00: Inflation is still quite high.
• 1:55
  SPEAKER_01: Yeah, three between three and four still at the moment.
• 1:58
  SPEAKER_00: The government is trying very hard to control that, but they can't.
• 2:02
  SPEAKER_00: Unemployment is still quite high.
• 2:03
  SPEAKER_00: The economy was the whole petrol situation.
• 2:06
  SPEAKER_01: It's actually quite hard to control inflation when the petrol price is is in that factor as well.
• 2:14
  SPEAKER_01: And obviously, everybody knows the war that's happening at the moment we're in Iran, and obviously they're the major, one of the major ports that send oil all over the world as well.
• 2:27
  SPEAKER_01: So it's not just New Zealand that's struggling, I think, at the moment.
• 2:33
  SPEAKER_01: I think it's a worldwide issue.
• 2:36
  SPEAKER_00: It is a worldwide issue, and we're sort of lucky in the way that we're in New Zealand and we're a bit hidden from the craziness that goes out there.
• 2:45
  SPEAKER_00: I did see the petrol prices do did go down.
• 2:48
  SPEAKER_01: Yeah, they did go down a wee bit, which was nice.
• 2:50
  SPEAKER_01: Yeah, but doesn't help me driving diesel.
• 2:53
  SPEAKER_00: Diesel went down a little bit as well.
• 2:55
  SPEAKER_00: Yeah.
• 2:55
  SPEAKER_00: I saw that.
• 2:56
  SPEAKER_00: It went down from$4 down to$3 something now.
• 2:59
  SPEAKER_00: 3.26 or something.
• 3:00
  SPEAKER_00: So it's an it's an interesting space to watch, absolutely.
• 3:04
  SPEAKER_00: The other thing I wanted to say is that a lot of longer term rates have gone up, like two-year rates have gone up.
• 3:12
  SPEAKER_01: Yeah, went up again today, actually.
• 3:13
  SPEAKER_00: And there was one of the favourite rates our clients were going for because everyone was thinking six months and twelve months are a bit too short.
• 3:20
  SPEAKER_00: Yeah.
• 3:20
  SPEAKER_00: So a lot of clients were going for two years.
• 3:22
  SPEAKER_00: Yeah, because generally that's what the cycle is, eh?
• 3:25
  SPEAKER_01: It's always been two years.
• 3:26
  SPEAKER_01: Yeah.
• 3:27
  SPEAKER_01: But that's creeped up to over five now.
• 3:30
  unknown: Yeah.
• 3:30
  SPEAKER_01: So it's quite interesting times again.
• 3:33
  SPEAKER_01: I think when we were told to survive till 2025, I think it's survive to 2027 now.
• 3:41
  unknown: See?
• 3:42
  SPEAKER_00: Two years.
• 3:43
  SPEAKER_00: Two years.
• 3:44
  SPEAKER_00: Yeah.
• 3:44
  SPEAKER_00: And and the thing is, I always say to the clients, someone's situation will be completely different to yours.
• 3:50
  SPEAKER_00: Like a lot of them come to us and they go, Oh, my friend did such and such.
• 3:54
  SPEAKER_00: Awesome for your friend.
• 3:55
  SPEAKER_00: Yes.
• 3:55
  SPEAKER_00: But you don't know what's happening in their life versus what's happening in your life.
• 3:58
  SPEAKER_00: In your life, you might be having a baby and you want to lock it for five years because you don't want to think about it until the baby goes to school.
• 4:05
  SPEAKER_00: Yeah.
• 4:06
  SPEAKER_00: Or you might want to lock it only for one year because you're selling a big asset overseas and you've got lots of money coming in, or you've got inheritance coming in, or something.
• 4:16
  SPEAKER_00: So I I always suggest to people to sit down as a financial advisor, like us, because we're the best.
• 4:22
  SPEAKER_00: But if you've got someone else that you want to sit down with, absolutely fine.
• 4:25
  SPEAKER_00: But what we've seen, let's do a quick summary as well for the end of the month, because we've just finished April.
• 4:32
  SPEAKER_00: And March and April, we've had one of our highest months that we've seen in terms of um transactions.
• 4:38
  SPEAKER_00: Yeah.
• 4:38
  SPEAKER_00: We've helped over 30 clients in each month, so 60 clients over the last two months.
• 4:43
  SPEAKER_00: Yeah.
• 4:43
  SPEAKER_00: And we've got another 30 for the months of May, which is incredible results.
• 4:47
  SPEAKER_00: And what we're seeing is a mixture of first-time buyers, investors, investors, and refinances.
• 4:54
  SPEAKER_00: Yeah.
• 4:54
  SPEAKER_00: A lot of refinances.
• 4:56
  SPEAKER_00: Because but even some of them are still staying with their banks and we're getting them cash retentions.
• 5:01
  SPEAKER_00: The banks are feeling generous.
• 5:03
  SPEAKER_00: They're giving you some money to stay, but you gotta know how to ask for it.
• 5:06
  SPEAKER_00: So please come to us if you don't know how to do that.
• 5:09
  SPEAKER_00: We can help you with that.
• 5:10
  SPEAKER_00: And some of our clients were blown away that they could actually get something, they weren't even expecting anything at all.
• 5:16
  SPEAKER_00: So I suggest for those that are listening, is if you are thinking to fix your loan, don't just go and fix, go and talk to an advisor.
• 5:26
  SPEAKER_00: Yeah.
• 5:26
  SPEAKER_00: And we just got off the phone with a client of mine, and he was kicking himself because, and I'm sorry if he's listening, his wife decided to do her favor to him to take off the financial pressure off his mind.
• 5:39
  SPEAKER_00: And she refixed last year for three years at 7.1%, which is really, really high rate.
• 5:47
  SPEAKER_00: And at that time, you could get even better rate.
• 5:50
  SPEAKER_00: But the problem is, even though she got excited that she sold something, which is awesome, she started taking taking some financial steps in their life.
• 5:59
  SPEAKER_00: It actually hindered them now.
• 6:01
  SPEAKER_00: Now that we're trying to refinance them, restructure their deal because they're doing all sorts of things with their lives and businesses, etc., now they have to pay quite a hefty fee to leave the bank.
• 6:10
  SPEAKER_00: Yeah.
• 6:11
  SPEAKER_00: And we've calculated he's still better off leaving, he's going to recoup that cost through new lower rates.
• 6:17
  SPEAKER_00: But what it pointed out to both of them is that they need to be on the same page making a decision.
• 6:23
  SPEAKER_00: Yeah.
• 6:23
  SPEAKER_00: So I often say to the clients, if a wife emails me or the husband emails me, I want to talk to both of them.
• 6:28
  SPEAKER_00: We want to make sure that both of them understand what they're getting themselves into.
• 6:33
  SPEAKER_00: And it's not that we don't trust one or the other, it's just two people that have the financial responsibility for that loan need to understand together what they're doing.
• 6:43
  SPEAKER_01: Yeah, I think like financial literacy is just so personalized as well.
• 6:49
  SPEAKER_01: So it's good to have a chat to like, you know, an expert like us to actually work out are you guys on the same path?
• 6:58
  SPEAKER_01: So clearly, with that example, one was on one path and the other was on another path.
• 7:04
  SPEAKER_01: One thought they were helping and you know, giving the other one a break, but it turned out to be a little bit detrimental for them.
• 7:12
  SPEAKER_00: Yeah, exactly, exactly.
• 7:14
  SPEAKER_00: So um so for those that are wondering whether the rates will go up or not, we don't know.
• 7:19
  SPEAKER_00: We know just as much as you do.
• 7:20
  SPEAKER_00: Every time we say, Oh god, they're climbing again, then they suddenly drop.
• 7:24
  SPEAKER_00: Last time we said, Oh look, they're dropping, they suddenly went up again.
• 7:27
  SPEAKER_01: So we actually don't know.
• 7:29
  SPEAKER_01: The uh market is so volatile at the moment.
• 7:32
  SPEAKER_01: Um, yeah, and and that's everywhere though.
• 7:36
  SPEAKER_01: Volatility is everywhere at the moment, and it's just so much uncertainty in in terms of that.
• 7:43
  SPEAKER_01: But the one thing that we're pretty certain of is that we've just seen so many first-home buyers, and it's great.
• 7:50
  SPEAKER_00: So many good deals, the vendors are willing to negotiate, everyone just yeah, getting some good deals out there.
• 7:56
  SPEAKER_00: People want their house sold, and there's lots of stock, and then buyers are actually getting really good deals.
• 8:02
  SPEAKER_01: So, yeah.
• 8:02
  SPEAKER_00: And the thing is, I also want to encourage people is that if you are looking to buy, start now because what we normally see is things tend to quieten down a little bit around winter.
• 8:12
  SPEAKER_00: But then come August, everyone wakes up and wants to do something, and that's where the bank's timelines get stretched out.
• 8:18
  SPEAKER_00: So right now we can get your approval within a few days, but then come August, September, we're gonna have two weeks, three weeks wait period.
• 8:26
  SPEAKER_00: So if you actually get yourself approved now, the approval can last up to six months.
• 8:30
  SPEAKER_00: Yeah, we do three months and then three months again.
• 8:32
  SPEAKER_00: So you gotta have that window to play for that.
• 8:35
  SPEAKER_00: Yeah.
• 8:36
  SPEAKER_00: Yeah, definitely.
• 8:37
  SPEAKER_01: So it's a good time.
• 8:38
  SPEAKER_01: Start early.
• 8:39
  SPEAKER_01: You don't have to find a house straight away.
• 8:40
  SPEAKER_01: Like Ziboniso said, we can actually get you pre approved and you know, up to six months.
• 8:47
  SPEAKER_01: Awesome.
• 8:48
  SPEAKER_00: Cool.
• 8:48
  SPEAKER_00: Thank you so much, Kounch.
• 8:50
  SPEAKER_00: Appreciate your time.
• 8:50
  SPEAKER_00: See ya.
• 8:51
  SPEAKER_01: Bye.