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Rate rises not prompting action

Most mortgage holders expect interest rates to rise this year – but they aren’t planning to do anything about it, new BNZ research reveals.

Monday, April 10th 2017, 3:12PM

by Miriam Bell

BNZ has just released its latest Financial Futures Research and it highlights a strong disconnect between outlook and action among mortgage holders.

Seventy percent of mortgage holders expect rates to go up this year, according to the research, which surveyed 2,000 people.

Yet, at the same time, 67% of those surveyed didn’t plan to make any changes to their mortgage.

BNZ chief executive Anthony Healy said those surveyed had been doing their homework because most (80%) expected a rise of less than 1% - which is what most economists are predicting.

“But despite being aware of this, nearly seven out of 10 people confess they have no plans to change their mortgage.

“We’ve had two years of the lowest interest rate environment in a generation, but it is frustrating to see that New Zealanders still seem to have a ‘set and forget’ or ‘she’ll be right’ mentality about their home loan.”

Part of the problem might be that New Zealanders don’t realise how small changes to their mortgage can have huge impacts, he said.

This was true in terms of reducing both the amount of interest they pay and how long they have their mortgage for.

“If we look at a $300,000 mortgage with 15 years left. Increasing fortnightly mortgage repayments by $100 will shave one year and nine months off your mortgage, as well as save nearly $16,000 in interest.

“But when we asked people how much time they believed they’d save by making small increases to repayments, they underestimated the positive impact it’ll have.”

The research also showed that 24% of those surveyed regularly monitor interest rates and proactively restructure their mortgage.

Healy said New Zealanders need to get savvy about updating their mortgage structure regularly, rather than being apathetic.

“Now’s an opportune time to ensure your mortgage suits the rates environment and your lifestyle. We’re on the cusp of a change, but it’s not necessarily going to be dramatic this year.”

Mortgage holders should make the most of the low rates environment and talk to their bank about the changes they should be making, he said.

When it came to making changes to a mortgage in response to rate rises, 16% of survey respondents were planning to increase the portion of their mortgage that was fixed.

Read more:

Market slowdown different this time

Tags: Anthony Healy BNZ interest rates Mortgage Rates

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.02 4.09 4.39

Last updated: 21 November 2019 9:39am

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