Long-awaited OCR Announcement

In the mortgage world the big news is that the OCR has finally been raised, which has been anticipated for a long time now. It is well worth finding out how this will affect you, and how to save money in this changing economic climate.

As expected, Graeme Wheeler announced an increase in the OCR rate this morning. It rose by 0.25%, to 2.75%. In short this means that the economy is doing well, and they want to contain any inflationary pressure. Further increases are expected to happen this year, and the OCR rate will probably have risen at least another 0.5%, by the end of 2014.

Important consideration to save money:

I’ve recently saved a client of mine $3000 per annum just by arranging a valuation on his property which cost $500, and I thought I’d share that idea with you this month. In some instances you don’t even have to pay for a valuation.

If you are looking to fix your mortgage rate, and if you obtained a mortgage with less than 20 per cent deposit when you bought your home, then it is important that you speak to us first. The reason for this is that the banks will offer you more expensive rates. Those rates will be based on your lending, which, according to them, is over 80%.

However, the chances are good that you will have built up equity over the last few years. Therefore what we do is have a look at your sales data, and determine whether there is enough equity to allow us to apply for better rates. If we are able to prove to the bank that your loan-to-value ratio (LVR) is below 80%, then we can get much better rates for you.

Some banks require a registered valuation and others will accept online valuation reports generated by themselves. So it is worth getting in touch, and we can go through that process which will enable us to negotiate great rates for you.

How much will the increased rate increase affect my payments?

The rate increase of 0.25%, may cost you about $16 per month. That is what the average cost will be on a $100,000 loan structure over 30 years (on a principle and interest basis). This information should help you if you’re trying to budget for any increases. It might be worthwhile for you to start putting the additional cost, per $100 000, into your budget now, just in case.

If you have any questions about what I’ve discussed this month, just let me know! I’d love to have a chat with you about how Loan Market can help you.

That’s it from me this month.

My best,

Nick

0211 9444 24

nick.kotze@loanmarket.co.nz