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Mortgages

Mortgage Rates Daily Commentary
Monday 15 July 2024  Add your comment
Distance between inflation and RBNZ’s target narrows; SBS rates change

All eyes this week will be on the Consumer Price Index data in the wake of the Reserve Bank’s slight change in mood on when interest rates will come down. [READ ON]

SBS has cut its 6 Months Lending rates, effective Saturday, 13 July 2024 [See here]

 

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More slimming tips for your mortgage

The second in an occasional series on ways to reduce your mortgage.

Monday, September 6th 1999, 12:00AM

by Paul McBeth

We're back with more ideas on how to put your mortgage on a diet (click here to read the first article in this occasional series).
But first, a reminder:
Beware break costs for fixed rate mortgages
If you have a fixed rate loan and are thinking of switching, ask your mortgage lender the exact cost as it mightn't be worth it. The break cost can vary widely, even from week to week, because it's usually worked out from current interest rate levels and the remaining loan term.

Banking Ombudsman Liz Brown says that this can catch people out when interest rates are moving rapidly: she knows of one case where a bank advised a customer that the penalty would be about $300, but it eventually ran into the thousands three or four weeks later.
Onto the slimming tips:
Talk to your mortgage lender
Make sure you're making best use of the products they offer. Have things changed since you first took out the mortgage? Perhaps you have more money available for repayments, or they've got new products such as revolving credit facilities that might suit you and save money. Can you consolidate more expensive debt such as credit card debt or personal loans?
Small changes can achieve big savings
It's easy to compare prices when you're buying something like a fridge or a car. But with a mortgage, the cost is your total interest bill (plus any fees); and that depends on the rate you borrow at and how fast you pay it back.
The message that everyone hammers is this: relatively small changes to the interest rate or to your repayments can have a huge impact on the total cost. Not convinced? Our last article gave an example of the savings from lower interest rates and you can see in the example below how increasing repayments by just $50 extra a fortnight cut $11,578 off the interest bill and 16 months off the term.
Play around yourself on one of the online calculators at mortgage lenders' sites to work out what happens when you change the variables: some will let you tinker with the repayment size and see the effect this has.
For example...
Let's take a table loan of $200,000 on a floating rate of 6.5 per cent. Note that these figures should give you the general idea, but they were generated by online mortgage calculators and are indicative only. They assume a constant interest rate and the projected savings don't take inflation into account.
  • Take a 20 year loan term and repay monthly:

  • Repayments are $1491.15 a month (principal and interest) and the total interest bill is $157,876.
  • Shorten the term to 15 years, still repay monthly:

  • Repayments are $1742.21 a month, total interest is $113,597.80.
    So, reducing the term from 20 to 15 years saves $44,278.20.
  • Keep the term at 15 years but repay fortnightly:

  • Repayments are $801.35 a fortnight , total interest is $113,327.85
    Repaying fortnightly instead of monthly only saves you $269.95
  • Stick with a 15 year term repaid fortnightly, but increase your repayments:

  • If repayments are $850 a fortnight, total interest is $101,750 and the term drops to 13 years 8 months.
    Repaying an extra $50 a fortnight saves $11,577.80 and cuts 16 months off the loan term.
    (If you had a spare $100 a fortnight and increased your repayments to $900, total interest is $92,500 and the term drops to 12 years 6 months).

    The next article in this series will look at some tricks of the trade for paying back your loan faster.
     
     
     
     

    Paul is a staff writer for Good Returns based in Wellington.

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    Mortgage Rates Table

    Full Rates Table | Compare Rates

    Lender Flt 1yr 2yr 3yr
    AIA - Back My Build 6.19 - - -
    AIA - Go Home Loans 8.74 7.14 6.75 6.39
    ANZ 8.64 7.74 7.39 7.25
    ANZ Blueprint to Build 7.39 - - -
    ANZ Good Energy - - - 1.00
    ANZ Special - 7.14 6.79 6.65
    ASB Bank 8.64 7.14 6.75 6.39
    ASB Better Homes Top Up - - - 1.00
    Avanti Finance 9.15 - - -
    Basecorp Finance 9.60 - - -
    Bluestone 9.24 - - -
    Lender Flt 1yr 2yr 3yr
    BNZ - Classic - 7.14 6.79 6.65
    BNZ - Green Home Loan top-ups - - - 1.00
    BNZ - Mortgage One 8.69 - - -
    BNZ - Rapid Repay 8.69 - - -
    BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
    BNZ - TotalMoney 8.69 - - -
    CFML Loans 9.45 - - -
    China Construction Bank - 7.09 6.75 6.49
    China Construction Bank Special - - - -
    Co-operative Bank - First Home Special - 6.79 - -
    Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
    Lender Flt 1yr 2yr 3yr
    Co-operative Bank - Standard 8.40 7.49 7.29 7.15
    Credit Union Auckland 7.70 - - -
    First Credit Union Special - 7.45 7.35 -
    First Credit Union Standard 8.50 7.99 7.85 -
    Heartland Bank - Online 7.99 6.89 6.55 6.35
    Heartland Bank - Reverse Mortgage - - - -
    Heretaunga Building Society 8.90 7.60 7.40 -
    HSBC Premier 8.59 - - -
    HSBC Premier LVR > 80% - - - -
    HSBC Special - - - -
    ICBC 7.85 7.05 6.69 6.59
    Lender Flt 1yr 2yr 3yr
    Kainga Ora 8.64 7.74 7.35 6.99
    Kainga Ora - First Home Buyer Special - - - -
    Kiwibank 8.50 7.99 7.79 7.55
    Kiwibank - Offset 8.50 - - -
    Kiwibank Special - 6.99 6.79 6.65
    Liberty 8.59 8.69 8.79 8.94
    Nelson Building Society 9.00 7.65 7.25 -
    Pepper Money Advantage 10.49 - - -
    Pepper Money Easy 8.69 - - -
    Pepper Money Essential 8.29 - - -
    SBS Bank 8.74 7.74 7.09 6.95
    Lender Flt 1yr 2yr 3yr
    SBS Bank Special - 7.14 6.49 6.35
    SBS Construction lending for FHB - - - -
    SBS FirstHome Combo 6.19 6.14 - -
    SBS FirstHome Combo - - - -
    SBS Unwind reverse equity 9.95 - - -
    Select Home Loans 9.24 - - -
    TSB Bank 9.44 7.79 7.55 7.45
    TSB Special 8.64 6.99 6.75 6.65
    Unity 8.64 6.99 6.79 -
    Unity First Home Buyer special - 6.55 6.45 -
    Wairarapa Building Society 8.60 6.95 6.85 -
    Lender Flt 1yr 2yr 3yr
    Westpac 8.64 ▼7.49 7.35 6.99
    Westpac Choices Everyday 8.74 - - -
    Westpac Offset 8.64 - - -
    Westpac Special - ▼6.89 6.75 6.39
    Median 8.64 7.14 6.82 6.65

    Last updated: 15 July 2024 11:47am

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