Something to think about. If house prices are rising, but interest rates are falling then the two more or less equal themselves out. The question to ponder is what will happen if interest rates fall further, or ( which is more likely) if interest rates stay the same for longer and longer? Judging by market reaction it appears that the market thinks that low interest rates are here to stay. It also makes you think that fixing rates is not a good idea. There is certainly a lot to chew over. It seems only yesterday the headlines were screaming about outrageous break fees being charged by banks. By floating you will avoid this nasty smack around the ears. Remember you can always fix if interest rates seem to be rising. Rises don’t happen overnight .
Confused? Don’t blame you.
Record high house prices worsen affordability in June, but still near best levels in 8 years on record low interest rates, Roost Home Loan Affordability report shows
July 30, 2012
By Bernard Hickey
Home loan affordability worsened in June as the national median house price rose to record highs, however record low interest rates continue to make housing affordable for double income households outside of central Auckland and Christchurch.
Housing supply shortages in central Auckland and Christchurch have powered a surge in house prices this year. An intensification of competition between banks has also boosted housing market activity as the outlook for interest rates remains subdued at current lows.
show affordability for young working couples remains near its best levels in almost eight years, although affordability for home buyers in central Auckland, Wellington and Christchurch remains difficult. See the regular reports here and the first home buyers’ reports here.
Banks are offering a variety of discounted fixed mortgage deals that include discounted legal fees, lower interest rates for borrowers with high equity and, in some cases, the discounting of break fees. First home buyers are also dipping into their KiwiSaver funds for deposits and obtaining high loan to value ratio loans.
“Mortgage borrowers are in a strong position to negotiate with their banks through a broker,” said Colleen Dennehy, a spokeswoman for Roost Mortgage Brokers, which sponsors the Roost Home Loan Affordability report from Interest.co.nz.
“Banks are offering various types of discounts to various types of customers so it helps to have a mortgage expert help borrowers through the maze ,” Dennehy said.