This blog entry might be a bit too boring for some. Since I can’t talk about anything else, I’ll just write about what’s keeping me busy for the past month. I mean the unusual busyness.
Due to the low Official Cash Rate (OCR) NZ has been experiencing since last year, home loan interest rates have been their lowest since the 80s according to news. And because of this, NZ is in the unusual era of “mortgage war” as what followers have dubbed about the ongoing tug of war among banks in their ways to attract home owners to switch their mortgage to their business.
The low OCR has finally made its impact on banks to lower their floating and fixed rates to the lowest they can be without compromising healthy margin. And because of this, borrowers are in their power to negotiate the lowest home loan interest rate including other monetary perks you can milk from these giants.
That’s what’s keeping me busy. I’ve been asking around on what they can offer me. Home loan borrowing has never been this pleasing.
After several weeks of going to and fro, I was able to get a good deal with WestpacTrust. I was able to get a floating rate of 5.5% per annum and given $2,000 money to go to my costs associated with the switching process (ie, lawyer’s fee, other bank’s loan closing fee, etc.). I had a colleague who was able to get a floating rate of 5% p.a. and had the bank pay for the break-free cost. How cool is that? Fixed rates are even being offered as low as 4.99% p.a for 1 year.
Due to the Christchurch earthquake and the Euro financial crisis, there are speculations that OCR will remain unchanged for the next couple of years. This is the main reason why we’re sticking in a floating mortgage. There’s no way the OCR will go further down. I think it’s reached its plateau. We'll keep tab on what's happening and if it's financially more beneficial, then we might decide to switch to fixed mortgage. But then again, this will all depend upon the situation by then.
For now, switching to Westpac will save us around 18% from our usual amortization. But because we have opted for an offset /revolving credit type of mortgage, our mortgage will potentially be paid earlier.
I’ll talk about that next time but for now I’m glad to reap some benefits from the current global economic downturn.
Labels: amortization, home loan, mortgage, revolving credit