Latest / The SME Stream / Jenee Tibshraeny: NZ Herald Wellington business editor on whether homeowners have missed the perfect time to fix

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Jenee Tibshraeny: NZ Herald Wellington business editor on whether homeowners have missed the perfect time to fix · The SME Stream

• 0:00
  Speaker 1: Brady and Bread read. With interest rates falling over the
• 0:02
  Speaker 1: course of the last year, borrowers have been tossing up
• 0:05
  Speaker 1: when to fix and for how long as you know.
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  Speaker 1: In hindsight, it now looks that a significant number of
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  Speaker 1: homeowners who tried to pick the trough in the cycle
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  Speaker 1: actually missed it. Jane Tips Trainey is the herold's Wellington
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  Speaker 1: Business Editor's been looking at this. Janey, good evening. Hi, Ryan,
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  Speaker 1: So if you're still waiting now, you've waited too long,
• 0:25
  Speaker 1: haven't you?
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  Speaker 2: Okay? I mean you never say never. As you just described,
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  Speaker 2: we live in a crazy world. But from what we
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  Speaker 2: currently see, it seems like the fixed interest rates at
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  Speaker 2: least it seems like they reached their bottom and around
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  Speaker 2: November in December they actually started tracking up. And based
• 0:45
  Speaker 2: on the new economic data we've had come out this year,
• 0:49
  Speaker 2: it seems like the economy is actually doing okay. We've
• 0:51
  Speaker 2: got manufacturing as strong, services sector is strong. Seems like
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  Speaker 2: actually the riskers that we might have a bit more
• 0:59
  Speaker 2: inflation and expected, which suggests it's very unlikely that OCR
• 1:03
  Speaker 2: will fall further. So it really does seem like we've
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  Speaker 2: had the lowest of the rates. It seems like we've
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  Speaker 2: already seen them.
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  Speaker 1: You've been looking at how many were trying to pick
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  Speaker 1: the trough, how many people were betting on rates dropping
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  Speaker 1: further after the last OCR cut in November, Right.
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  Speaker 2: Yeah, that's right. So the Reserve Bank collects all this
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  Speaker 2: mortgage data from banks and according to that data, in November,
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  Speaker 2: that's for the latest time that we have it for
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  Speaker 2: about half of new mortgage lending done in November was
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  Speaker 2: floating versus fixed, So that is actually in November that
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  Speaker 2: was a super high percentage. In fact, it was forty
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  Speaker 2: nine percent. That was the highest percentage on the Reserve
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  Speaker 2: Banks records that go back to twenty twenty one. It
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  Speaker 2: was the highest percentage of a new mortgage lending that
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  Speaker 2: was floating. So you know, that suggests to me that
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  Speaker 2: a whole bunch of people no November thought we'll sit
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  Speaker 2: tight for a bit, We'll wait for interest rates to
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  Speaker 2: fall further. Once they do, then we'll lock in for
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  Speaker 2: like two years or three years, even eighteen months, but
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  Speaker 2: will just sit tight for a bit longer. So what
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  Speaker 2: ended up happening for those people was that in late
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  Speaker 2: November the Reserve Bank did cut the o CR, but
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  Speaker 2: the market after that was surprised by some of the
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  Speaker 2: Reserve Banks commentary, and interest rates actually started rising. So
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  Speaker 2: you know, I don't know if our listeners and readers recall,
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  Speaker 2: but you know there was a sort of like a
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  Speaker 2: flurry of banks lifting their longer term interest rates in December.
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  Speaker 2: So for all those people who in November, there's a
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  Speaker 2: large portion of them waiting for the for the cuts.
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  Speaker 2: The OCR cut did come, but then unexpectedly the market
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  Speaker 2: started going north because it was surprised by the Reserve
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  Speaker 2: Banks commentary. So if they did, you know, at that
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  Speaker 2: point want to rush to fix, that would have been
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  Speaker 2: a pretty short time. Between the Reserve Bank cutting the
• 3:00
  Speaker 2: OCR in late November and banks lifting lifting rates, they
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  Speaker 2: would have had probably only a few weeks to rush
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  Speaker 2: in and lock in those those rates. You know. I
• 3:12
  Speaker 2: talked to a mortgage broke and he said, yes, there
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  Speaker 2: was a big flurry. People did rush you know, but
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  Speaker 2: of course you have to It is interesting to look
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  Speaker 2: at the starter, but you do have to look at
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  Speaker 2: the bigger picture. Thirty year mortgage, twenty year mortgage. You know,
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  Speaker 2: there are all sorts of ups and downs, but you know,
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  Speaker 2: it's interesting. It is interesting nonetheless, and you know, if
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  Speaker 2: you have a big mortgage, A few percentage points does
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  Speaker 2: make a difference.
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  Speaker 1: I was going to say, what do we know what
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  Speaker 1: the difference you know, if you've got a million dollar mortgage,
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  Speaker 1: would it in the scheme of things, be a massive
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  Speaker 1: difference to you whether you you know, whether you in November,
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  Speaker 1: December or January.
• 3:48
  Speaker 2: So the hikes that the banks did was they lifted
• 3:52
  Speaker 2: their longer term rates by about thirty basis points, So
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  Speaker 2: you know that's a notable lift. I mean, it probably
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  Speaker 2: depends on how price sensitive you are, and you know,
• 4:03
  Speaker 2: whether you were if you were part of that cohort
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  Speaker 2: that was trying to time the market sitting there on floating,
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  Speaker 2: you know, paying a bit more to be on floating,
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  Speaker 2: waiting to pick the bottom, then you know you might
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  Speaker 2: have been a bit disappointed. Probably depends on your you know,
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  Speaker 2: your your view on these things as to how gutting
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  Speaker 2: that would be.
• 4:23
  Speaker 1: Yeah, Jna, good to have you on the show as always.
• 4:25
  Speaker 1: Jenay tips Trainey is The Herald's Wellington Business editor and
• 4:28
  Speaker 1: has a story out in the Herald about all of this.
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  Speaker 1: You can go and read it ended Herald dot co
• 4:32
  Speaker 1: dotting z. For more from Heather Duplessy, Allen Drive, Listen
• 4:36
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• 4:40
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