The Reserve Bank has announced – as anticipated – that it will keep the Official Cash Rate at 2.5%. The OCR has been kept at this low rate since the start of the year but Alan Bollard this morning warned that the conditions for our major trading partners had weakened significantly and that if the recent developments in the global financial crisis worsen, it will need to increase.
So what is the Official Cash Rate and what does it mean for Kiwi homeowners and buyers? The OCR is the interest rate set by the Reserve Bank to meet our inflation target and for homeowners, this means that interest rates will stay below 6% for now but there is a strong likelihood that it will increase in the next few months. For homeowners on a floating loan, the industry advice is to stick with it for now but to chat to a mortgage broker to make a plan to fix it before the increases hit. And of course, if you’re thinking of selling, the market conditions are favourable for buyers so you should be able to expect a swift and smooth sale process if your property is in a good location and a good condition.
If you’re thinking of buying property, the banks and mortgage brokers advise to strike now while the cost of borrowing is low and you can fix the loan to stay at this rate so you can avoid the increases when they come.
If you need any advice about buying or selling in central Auckland, give us a yell on 965 3656 and we’ll do everything we can to help.