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OCR And Mortgage Rates In Plain English · That Home Loan Hub

• 0:10
  SPEAKER_01: OCR, our favorite three letters.
• 0:13
  SPEAKER_01: That's probably the most key word in our podcast.
• 0:16
  SPEAKER_01: We often talk about OCRs.
• 0:17
  SPEAKER_01: Hello, James.
• 0:18
  SPEAKER_00: Hello, huh?
• 0:19
  SPEAKER_01: Official cash rate is about to be reviewed, I believe, end of this month.
• 0:24
  SPEAKER_00: Yep.
• 0:24
  SPEAKER_01: And I read ANZ report.
• 0:26
  SPEAKER_00: Yep.
• 0:27
  SPEAKER_01: And it said that they think it's not going to change.
• 0:30
  SPEAKER_01: What are your thoughts?
• 0:31
  SPEAKER_00: I I I totally agree with that based on the commentary that I'm hearing from various economists.
• 0:37
  SPEAKER_00: That it's we've got a situation where if they were to put in interest rates up, it would just kill the economy.
• 0:44
  SPEAKER_00: The OCR up.
• 0:46
  SPEAKER_00: It would just kill the economy.
• 0:47
  SPEAKER_00: And you know, they're not going to want to do that.
• 0:50
  SPEAKER_00: Or the oil putting the OCR up is not going to bring oil prices down.
• 0:55
  SPEAKER_00: Do you know what I mean?
• 0:56
  SPEAKER_00: Because they're worried about inflation.
• 0:57
  SPEAKER_01: I was about to say inflation is on the rise.
• 0:59
  SPEAKER_00: Yep.
• 1:00
  SPEAKER_00: Inflation is potentially on the rise with the with with oil prices going up.
• 1:05
  SPEAKER_00: But by using the OCR to put up interest rates, it's not gonna it's not gonna do anything to bring the oil price down.
• 1:14
  SPEAKER_00: So there's it's it's kind of a thing they don't have any control over.
• 1:17
  SPEAKER_01: I believe Anna Brennan came out and said, look, it's just gonna be a short-term pain.
• 1:21
  SPEAKER_01: We're not gonna have any jerk reaction to it.
• 1:24
  SPEAKER_01: We're just gonna keep OCR down, we're just gonna try to persevere.
• 1:27
  SPEAKER_01: Yep.
• 1:28
  SPEAKER_01: It should blow over, it should be fine.
• 1:30
  SPEAKER_01: Yep.
• 1:31
  SPEAKER_01: But the banks are still rising interest rates.
• 1:33
  SPEAKER_01: They are they're all over the shop, eh?
• 1:35
  SPEAKER_00: Because I I thought I saw ASB lower this.
• 1:38
  SPEAKER_01: Yeah, well, I think this morning something popped up that they dropped the 18 months one.
• 1:42
  SPEAKER_01: Yeah, but all the other ones are still higher.
• 1:44
  SPEAKER_01: So at one point we got below 5% for the three-year rate.
• 1:47
  SPEAKER_01: Yep.
• 1:48
  SPEAKER_01: And I remember saying to people, the moment it's below 5% for three-year rate, just fix it.
• 1:52
  SPEAKER_00: We got a good one, I got c some c clients, a good three-year one.
• 1:55
  SPEAKER_00: They just got it just in time before Westpac put theirs up.
• 1:58
  SPEAKER_00: Yeah.
• 1:59
  SPEAKER_00: And we had to actually, you know, we had to do the prove, yeah, we had to prove it that we did it on time.
• 2:05
  SPEAKER_00: Yeah.
• 2:05
  SPEAKER_00: Because they weren't really gonna go for it.
• 2:07
  SPEAKER_01: But yeah, so you know, now it's sort of lingering around 5.19, 5.2.
• 2:14
  SPEAKER_01: So I guess the real issue is for New Zealanders trying to understand how it's all linked together.
• 2:21
  SPEAKER_01: And you point it out right.
• 2:23
  SPEAKER_01: Raising OCR is not gonna help us elevate oil prices.
• 2:27
  SPEAKER_00: Yeah.
• 2:27
  SPEAKER_01: They're not really fully connected in this instance here.
• 2:31
  SPEAKER_00: Yeah, well, that's coming from overseas.
• 2:33
  SPEAKER_00: The oil price is is being is being driven by something overseas, you know, the conflict in Ira, you know, in that uh between Iran and America and so forth.
• 2:43
  SPEAKER_00: So, and and that's causing inflation back here because of oil prices.
• 2:47
  SPEAKER_00: And that's slowly gonna, if this carries on, it's slowly gonna transfer into food prices and stuff like that, because oil is petrol is used to drive products around.
• 2:58
  SPEAKER_00: Yeah, it makes it more expensive to get the the the groceries to the the various places.
• 3:03
  SPEAKER_00: So, but that's a more of a medium to long term impact.
• 3:07
  SPEAKER_00: So I de at the moment it it's really just the oil prices that are that are that are causing the inflation.
• 3:15
  SPEAKER_01: What are your thoughts on people that are thinking of quitting job because they think that driving to work is more expensive and then therefore, you know, if they quit a job and go and benefit, they might save more money?
• 3:29
  SPEAKER_00: My initial reaction is that is a really stupid thing to do because this could be a short-term thing.
• 3:35
  SPEAKER_00: Yeah.
• 3:36
  SPEAKER_00: This could be a short-term problem.
• 3:37
  SPEAKER_00: Why would you give up your work?
• 3:39
  SPEAKER_00: The w the what the one means of getting you ahead in your life for your future or your family's future to go on a benefit.
• 3:47
  SPEAKER_01: But you'd be surprised how many people are out there contemplating this idea, you know?
• 3:52
  SPEAKER_01: And when you actually put the numbers together, you don't get much on a benefit.
• 3:55
  SPEAKER_01: And I know the government announced that they will give you$50 extra to help out those law-earning families.
• 4:02
  SPEAKER_01: But again, like that$50, is it gonna make much difference?
• 4:05
  SPEAKER_00: It's a very short-term thing.
• 4:08
  SPEAKER_00: I mean, perhaps look for a different job that's closer might be a better alternative.
• 4:13
  SPEAKER_00: I mean, you just you can't this is the way I think about it.
• 4:18
  SPEAKER_00: You can't think if you go on to a benefit, you you're limited as to what you're gonna be able to do.
• 4:24
  SPEAKER_00: You you know, and and sort of the benefits don't go up in value a lot, you know, how much you get paid, and you're relying on somebody else to provide for you.
• 4:35
  SPEAKER_00: That's okay for a short amount of time, but I just don't really get that kind of thinking.
• 4:39
  SPEAKER_00: I mean, people can do it, I guess, but I wouldn't be really very happy if I uh if I had clients that were doing that.
• 4:46
  SPEAKER_00: Yeah.
• 4:46
  SPEAKER_00: I'd be really strongly against it.
• 4:48
  SPEAKER_01: But it also affects their mortgage applications, we can't help them as much.
• 4:52
  SPEAKER_01: I mean, I do have a couple of clients at the moment on benefit that are that have got across the line, but again, they had much high deposits and they were only borrowing you know 300k, 350k.
• 5:02
  SPEAKER_01: So it wasn't like they were borrowing a million dollar house.
• 5:06
  SPEAKER_01: I guess with the OCR this month, we'll just wait and see what's gonna happen.
• 5:11
  SPEAKER_01: It's not gonna change.
• 5:13
  SPEAKER_01: Hopefully, the banks will come down a bit and not give in to the whole stress of oh my god, the world is ending, and we're just gonna carry on as normal.
• 5:22
  SPEAKER_01: But again, guys, just remember 18 months ago we were sitting at six and a half percent interest rates.
• 5:28
  SPEAKER_01: Yep.
• 5:29
  SPEAKER_01: You know, we're sitting at five now.
• 5:30
  SPEAKER_01: Yeah, like it's we're still better off than what we were, and the house prices are much down as well.
• 5:38
  SPEAKER_00: Affordability is the best it's been for a long, long time, especially if you're in our our region, Wellington Capity.
• 5:44
  SPEAKER_00: You know, prices are all 30% of their peaks.
• 5:47
  SPEAKER_00: So that's you know, from during COVID.
• 5:50
  SPEAKER_00: So look, we get uh if people we get stuck in the short terminism.
• 5:55
  SPEAKER_00: What's going on?
• 5:56
  SPEAKER_00: We've got a what do we call it?
• 5:58
  SPEAKER_00: There's a bias about a relative it's called like a relativity bias or something like that.
• 6:02
  SPEAKER_00: I can't remember the exact word.
• 6:04
  SPEAKER_00: But you you get so caught up in what's happening now.
• 6:08
  SPEAKER_00: You know, you don't see what's going what's happened historically or what's happen happened in the future.
• 6:14
  SPEAKER_00: You're just in the now, and this is all you can think about.
• 6:17
  SPEAKER_00: But you know, these things do come and go.
• 6:20
  SPEAKER_00: Take a long-term perspective on what you're doing, medium to long-term perspective.
• 6:25
  SPEAKER_00: What is it that you want to achieve?
• 6:26
  SPEAKER_00: And then, you know, the OCR, I don't think that's gonna be moving anywhere for a while.
• 6:31
  SPEAKER_00: I I really don't, but but will we watch the banks because the banks try to sort of outmaneuver the re the reserve bank if they s think that the OCR is gonna get moved up, you know.
• 6:45
  SPEAKER_01: Sometimes they react a bit too soon.
• 6:47
  SPEAKER_00: Yeah, yeah, that's right.
• 6:48
  SPEAKER_01: But then we do see the reaction afterwards.
• 6:50
  SPEAKER_01: So if you are hanging out on your floating rates and you know, wondering what what to do, just reach out to us.
• 6:55
  SPEAKER_01: We should be able to talk about what's relevant to you, regardless of what's going on in the world.
• 7:00
  SPEAKER_01: We need to talk about what are your goals, yeah, what are your aspirations.
• 7:03
  SPEAKER_01: You may want to sell a house in six months' time.
• 7:06
  SPEAKER_01: So, you know, worrying about three-year rate is none none of the concern for you.
• 7:10
  SPEAKER_01: Because if you're gonna sell the house and move to Australia, who cares?
• 7:13
  SPEAKER_01: But if you are planning to have a baby and go off work for the next five years, you know, maybe then the five-year rate is a good option for you, which is still in a good spot, like 5.5, I think, for a five-year rate.
• 7:23
  SPEAKER_01: So, you know, what you can think about is OCR will happen, it will come and go, it happens six times a year.
• 7:31
  SPEAKER_01: You know, things happen around it, the banks move rates, etc., etc.
• 7:35
  SPEAKER_01: But what do you need to do for your particular situation?
• 7:39
  SPEAKER_01: That's what I always come back to.
• 7:40
  SPEAKER_00: Yep, your goal, and that really helps if we know what your goals are, because then we can really help you.
• 7:45
  SPEAKER_00: And don't get caught up in the the headlines that you see every day in the news.
• 7:49
  SPEAKER_00: Yeah, it's that's just you know, we we look we work behind the scenes, so you see those headlines all the time.
• 7:56
  SPEAKER_00: It's always dramatic.
• 7:58
  SPEAKER_00: Dramatic?
• 7:59
  SPEAKER_01: Dramatic.
• 8:00
  SPEAKER_01: Not traumatic, not traumatic.
• 8:02
  SPEAKER_01: Well, could be traumatic as well.
• 8:05
  SPEAKER_00: Um, but you know, talk to us because we've seen all that stuff, right?
• 8:09
  SPEAKER_00: Exactly.
• 8:09
  SPEAKER_00: And plus, there are some lenders with some really good cashbacks as well.
• 8:13
  SPEAKER_01: I was about to say, my gosh, one of the lenders came out and they did similar to what ANZ did before Christmas, but they're offering 1.25% cash back for eligible customers.
• 8:24
  SPEAKER_01: So we're not gonna tell you who it is, we're gonna keep it a secret because we want you to call us.
• 8:28
  SPEAKER_01: Absolutely.
• 8:29
  SPEAKER_01: So call us if you heard this.
• 8:31
  SPEAKER_01: 1.25% cashback for the eligible clients.
• 8:34
  SPEAKER_01: If you think you're eligible, give us a call.
• 8:36
  SPEAKER_01: But you don't know if you're eligible if you don't call us.
• 8:38
  SPEAKER_00: Absolutely.
• 8:38
  SPEAKER_01: It's a bit of a trap there.
• 8:39
  SPEAKER_01: But also tell your friends, tell your friends.
• 8:41
  SPEAKER_01: And we love when we get referrals, we love it.
• 8:44
  SPEAKER_01: It's so much more fun when we answer the phone and someone says, Oh, someone referred you to us.
• 8:49
  SPEAKER_01: Yeah, makes us so happy.
• 8:50
  SPEAKER_01: Like, think about yourself and your business.
• 8:52
  SPEAKER_01: You know, if someone refers you someone, it's just so much easier to talk to that person.
• 8:57
  SPEAKER_00: We do the little dance, don't we?
• 8:58
  SPEAKER_00: Little jig.
• 8:59
  SPEAKER_01: We do, we do, not together, individually.
• 9:02
  SPEAKER_01: So, you know, to summarize this conversation really is OCR will be reviewed at the end of this month.
• 9:09
  SPEAKER_01: The news is basically it it shouldn't change.
• 9:13
  SPEAKER_01: The rates hopefully will stay the same as the banks, maybe go back down again.
• 9:18
  SPEAKER_01: And we just need to control what we can control.
• 9:20
  SPEAKER_01: Yep.
• 9:20
  SPEAKER_01: Done.
• 9:21
  SPEAKER_00: Absolutely.
• 9:22
  SPEAKER_01: Bye.