Fixed or Floating?
It’s the age-old question, should I choose a fixed or floating interest rate mortgage? And right now, with recent increases to the official cash rate (OCR), is a great time to reconsider your home loan options.
But when it comes to home loans, one size most definitely does not fit all, and that means there is no simple answer to what loan type you should choose. Instead, you need to take into account the economic conditions in conjunction with your own current situation and future goals.
The Reserve Bank of New Zealand (RBNZ) is currently returning the official cash rate (OCR) to ‘more normal’ levels after the low cash rate position adopted during the global financial crisis. Although some weak economic data suggests that the timing and pace of increases may be slower than originally expected, at this stage the RBNZ is still looking to raise the OCR to around 5 per cent.
Changes to the OCR generally flow through to the floating rate offered on home loans, but with the increases slowing down, there is the potential to make some big inroads into your debt while floating rates are still relatively low.
Meanwhile, fixed rate home loans, particularly over 2- and 3-year terms, have been falling recently, making these rates very attractive to borrowers in the here and now.
So which type should you choose?
When you are considering what type of loan is the right one for you, interest rate alone should not be the deciding factor. It is important to consider the entire home loan package when making a decision, in conjunction with your current situation and medium term goals.
Here are some questions to ask yourself to help with your decision:
- What do I want/need from my home loan in the short to medium term?
- What is the difference between fixed home loan rates and floating home loan rates?
- Which home loan/s in today’s market will suit my situation?
- How flexible are different fixed and floating home loans?
- What interest rates are currently available from a wide range of lenders?
- What are the costs for different fixed rate and floating rate home loans? How do they compare over a certain period of time?
- Are there special home loan offers available in the market?
To compare fixed and floating rate options, or to review your current home loan, make an appointment today.
Covering Your Life
Life insurance cover is one of the most comprehensive personal risk insurance policies available. It pays out a lump sum in the event of a premature death, money that could potentially make a huge difference to your family financially.
Life insurance policies will vary greatly on how much is paid out. Generally speaking, the larger the payout you are after, the higher your premium will be. Other factors which may affect the cost of your premium include whether or not you are a smoker, or if you have any existing medical conditions.
What you are covered for will also vary between policies so it’s important to understand what events will trigger a payout. Most policies will cover a range of accidents and illnesses.
Once you have life insurance, you should make sure you review it regularly to ensure your cover is adequate. Some policies will allow you to automatically increase costs, by indexing for inflation, for example, but some won’t so you will have to adjust your policy manually.
Your risk adviser can assist you in determining your life insurance requirements and to making changes to your existing policy.
Residential Property Price Sets Midyear Record
Residential property prices firmed last month to the highest June median ever, according to figures released this week by the Real Estate Institute of New Zealand (REINZ).
After easing back to $350,000 in May, the national median residential property price rose to $352,500 in June. This figure is 3.67 per cent higher than last year’s June median of $340,000 and also an increase on the previous highest June median of $347,500 recorded in 2007.
Releasing the figures, REINZ President Peter McDonald remarked that the predicted post-Budget blues have not come to fruition and we are not seeing the forecast fall in prices.
“What we have is a genuine rather than a speculative market, with people seeking and buying homes to meet their own needs,” Mr McDonald said.
He did warn, however, that the REINZ statistics should not be taken as an indicator individual house values are still rising. They are purely the median of all sales during the month and can be impacted by the number of properties sold at either end of the price bracket.
“The average gap between listing and selling prices last month was relatively small at only four to five per cent which indicates successful vendors are being realistic in assessing the market value of their home,” Mr McDonald said.
Reflecting the traditional winter slow down of the real estate market, residential property transactions of 4575 last month were down on the May total of 5206, and sales of 6040 in June last year. But the total is more than the 4305 sales transactions recorded in June 2008.
“The national median number of days to sell increased from 43 in May to 45 in June but was over 60 days in Waikato/BOP, Hawkes Bay, Manawatu/Wanganui and Taranaki, and 86 days in Central Otago Lakes which suggests significant regional differences in the state of the property market,” Mr McDonald commented.
The total value of residential sales, including sections, in New Zealand in June was $1.96 billion, a decrease on the May total of $2.27 billion. The breakdown of the values of the properties was 156 for $1 million plus, 539 for $600,000 – $999,999, 1,162 for $400,000 – $599,999 and 2,718 under $400,000.
Movements in the median price varied widely from district to district across the country with falls as high as 11 per cent in 4 regions, and increases of up to 10 per cent in the other 8 when compared with the same month last year.
The largest rise in the median price was in Canterbury/Westland, which is up nearly 10.2 per cent on the previous year and the largest falls were in Northland down 9.6 per cent and Southland down 11.1 per cent.
Deceiving the Eye
We’ve all groaned at the old joke that `a door is not a door when it’s ajar’, but what if it is a work of art? Keeping with the humour and adding a little pleasing aesthetic, Trompe L’Oeil stickers from Couture Deco give doors a whole new dimension.
French for `deceive the eye’, the door stickers allow you to easily enhance your portal into the next room into a portal to a new world – such as old metropolitan stairs, an empty dresser, French catacomb stairs, modern commercial escalator and elevators, cathedral corridors, or a cupboard packed full to the brim with books.
