Latest / Best of Business / 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 · Best of Business

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