Latest / That Home Loan Hub / Khounch Cares Ep #1 - The Future of Your Mortgage: Insights into the OCR Drop

Transcript

Khounch Cares Ep #1 - The Future of Your Mortgage: Insights into the OCR Drop · That Home Loan Hub

• 0:10
  Speaker 1: Hello and welcome to the episodes of Kunchai Cares.
• 0:15
  Speaker 1: Hello, kunch Kia ora, can I call you Kunch?
• 0:18
  Speaker 1: Yeah, of course, awesome.
• 0:20
  Speaker 1: Thank you so much.
• 0:21
  Speaker 1: We've started our new thing with you here, which is really really cool.
• 0:25
  Speaker 1: I'm really excited about what we're going to do together.
• 0:28
  Speaker 1: Cool, all right.
• 0:30
  Speaker 1: So today we're going to talk about Kunch Cares, about the OCR yes.
• 0:38
  Speaker 1: Oh, clearly I care.
• 0:40
  Speaker 1: We both care and along with the whole country of New Zealand, right the recent.
• 0:45
  Speaker 1: OCR announcement came out.
• 0:47
  Speaker 1: They've dropped it by 0.5 basis, and what is it going to mean for our people?
• 0:55
  Speaker 2: Well, yes, so the official cash rate dropped by 0.5 last Thursday, which is great news for homeowners and also anyone who is looking to get into the market, because it just means interest rates are dropping.
• 1:09
  Speaker 2: So we can already see that the banks have already moved on some interest rates, especially that 4.99 that we've seen floating around now.
• 1:21
  Speaker 2: So hopefully we see a little bit more of a drop in terms of I guess the floating rates have dropped as well by that amount.
• 1:34
  Speaker 2: Floating rates have dropped as well by that amount, which is also kind of what the bank uses to do their test rate.
• 1:43
  Speaker 1: So let's talk about test rate.
• 1:44
  Speaker 1: I'm just going to stop you right there.
• 1:45
  Speaker 1: So we've got real losers here and we've got real winners.
• 1:50
  Speaker 1: So the losers are I'm sorry, mum and dad, you know grandparents term deposit investors.
• 1:54
  Speaker 2: Correct, correct.
• 1:54
  Speaker 1: So they are the ones that are going to be losing.
• 1:56
  Speaker 1: If your money is sitting in savings accounts right now, you probably would see a drop in your savings, correct.
• 2:03
  Speaker 1: However, the winners are those that have a home loan, yes, and especially if you are on those back my bill rates, for instance.
• 2:13
  Speaker 1: They're going to be dropping.
• 2:14
  Speaker 1: We've got rates that are dropping for those that are coming off the refix, yep.
• 2:18
  Speaker 2: And then our offset clients.
• 2:20
  Speaker 2: Offset clients, yeah, the ones who are on the revolving credits, those ones.
• 2:25
  Speaker 2: So yeah, those rates are improving and also we're seeing a lot of people still staying on floating to see Whether there will be more drops, Correct?
• 2:33
  Speaker 2: So you know, it's kind of getting a little bit better out there, making things a little bit more affordable, keeping money in people's pockets as well, a wee bit more of those drops on interest rate, because obviously it makes the repayments.
• 2:46
  Speaker 1: It makes a huge difference.
• 2:48
  Speaker 1: Absolutely Like I fixed for six months six months ago.
• 2:50
  Speaker 1: My rate is coming up soon and I'm so excited because on one of my loans the difference is like $300 a week.
• 2:57
  Speaker 1: A week A week that's phenomenal.
• 2:59
  Speaker 1: That's like someone's grocery shop for a whole week.
• 3:01
  Speaker 1: That's pretty much the difference between someone being fed or not fed, correct?
• 3:05
  Speaker 1: Yeah, right.
• 3:07
  Speaker 2: How cool is that so?
• 3:08
  Speaker 1: let's talk about the servicing rates In plain language, for those that don't understand what servicing rate you know, testing rate.
• 3:14
  Speaker 1: Let's talk about that a little bit.
• 3:16
  Speaker 1: Yeah, so what does it mean?
• 3:17
  Speaker 2: So that's the rate that the bank tests you on.
• 3:20
  Speaker 2: So it's your risk tolerance, basically.
• 3:23
  Speaker 2: Your ability to borrow money Correct and your ability to borrow.
• 3:27
  Speaker 2: So when that rate drops, it means your ability to borrow does improve, so it does increase.
• 3:33
  Speaker 2: Ability to borrow does improve, so it does increase.
• 3:39
  Speaker 2: So you may not have been able to purchase that house last month because you were short by, I don't know, 20k or 50k.
• 3:43
  Speaker 2: This month it may be a possibility and, fingers crossed, that house is still on the market because that's the other side of the coin, isn't it?
• 3:52
  Speaker 1: as the interest rates drop down, the house prices tend to go a little bit up, but also they go faster because people start to have that formal again.
• 4:02
  Speaker 2: Yeah, so they can borrow more, which means they're like, oh, actually, we're now in with it, we might be able to get that house.
• 4:08
  Speaker 2: So, yes, we'll see probably a little bit of movement on that side as well, although there is a few stock on the market as well.
• 4:17
  Speaker 1: Yeah, and at the recording of this episode, the testing rates are sitting at about 7.2, which is fantastic.
• 4:23
  Speaker 1: So this is where we were pre-COVID, I think.
• 4:26
  Speaker 2: Yeah.
• 4:27
  Speaker 1: And then it's gone down a little bit further around COVID time.
• 4:30
  Speaker 2: Yeah, I think I've seen one that's come out at 7 as well.
• 4:34
  Speaker 2: Yeah, exactly.
• 4:40
  Speaker 1: So what it means, guys, is basically if the times do get tough and the rates are at 7%, can you still afford to repay your mortgage?
• 4:44
  Speaker 1: And by the bank's calculations, it means you can, if they've approved you at 7%, even if the interest rates are sitting at 4.99%, correct, yeah?
• 4:53
  Speaker 1: So let's talk about predictions a little bit, let's play a bit of a game, and then we can look back at it later in the year.
• 4:59
  Speaker 1: What do you think is going to happen for the rest of the year, kunj?
• 5:03
  Speaker 2: Well, we've got another cash rate announcement in April, so April is not too far away, because March is next week.
• 5:12
  Speaker 1: I know Where's the year going.
• 5:13
  Speaker 1: It's gone way too fast.
• 5:19
  Speaker 1: So April is coming up.
• 5:20
  Speaker 1: So for those that are sitting at the moment and contacting us whether they should refix or float whatever I mean, of course this is not a financial advice, but as a general rule, you know, go and speak to your financial advisor, correct?
• 5:29
  Speaker 2: Yeah, speak to an expert.
• 5:30
  Speaker 2: Definitely Speak to an advisor.
• 5:32
  Speaker 2: Just get their thoughts on that, because each person's situation is different.
• 5:37
  Speaker 2: It might be suitable for one person to flow, it might not be for the other person.
• 5:42
  Speaker 2: So, yeah, definitely get some advice.
• 5:44
  Speaker 1: Fantastic.
• 5:45
  Speaker 1: So we think that hopefully at the next OCR announcement it's going to drop again.
• 5:50
  Speaker 1: And then I think the next one is in May or June, isn't it?
• 5:53
  Speaker 1: I?
• 5:54
  Speaker 2: think so.
• 5:55
  Speaker 2: I think it's about six.
• 5:56
  Speaker 2: I haven't gotten that far because I'm too scared how fast this year has gone.
• 6:00
  Speaker 1: Oh my God, we're like almost a quarter in, yeah.
• 6:02
  Speaker 1: So we've got a few announcements this year, guys, and you should really reach out to your financial advisor.
• 6:10
  Speaker 1: Whether you're already a homeowner, you know whether you should fix a float or whether you're looking to buy.
• 6:14
  Speaker 1: Your chances are better than they were last year.
• 6:18
  Speaker 1: Definitely, yeah.
• 6:19
  Speaker 1: Yeah, the banks seem to have loosened up a little bit as well.
• 6:23
  Speaker 1: It's not as tight anymore where they're telling you you know you should cut back on your coffees and stuff like that.
• 6:29
  Speaker 1: But budgeting is absolutely important and we've covered a budgeting episode as well with James.
• 6:33
  Speaker 1: So for those out there listening, please go back and listen to that episode around budgeting and what you can do to help yourself get better in this position and get your foot in the door.
• 6:44
  Speaker 2: Yeah, get in the housing market, get in the market.
• 6:46
  Speaker 1: Get in the market.
• 6:46
  Speaker 1: I mean, Koontje, you've been in this industry for 18 years.
• 6:48
  Speaker 1: You've seen it all.
• 6:49
  Speaker 1: Right, yeah, seen it all.
• 6:51
  Speaker 2: And it's crazy what you can actually do.
• 6:55
  Speaker 2: You think you're not there, you're not ready, but you literally just need to speak to your advisor and we've seen a lot of people who thought they weren't ready to buy a house has actually been able to achieve that goal?
• 7:09
  Speaker 1: Yeah, exactly, and we'll talk about it in the next episode.
• 7:12
  Speaker 1: Thank you so much for listening to this one.
• 7:14
  Speaker 1: Stay tuned for more and go through and browse some other ones that we've got coming out.
• 7:18
  Speaker 1: So thank you.