The Reserve Bank surprised many by dropping the Official Cash Rate (OCR) by 50 basis points in August. Many believed it would be 25 basis points, so it came as a bit of a surprise.

Initially the banks only moved their floating rates and it took about a week before we saw the fixed rates they were offering begin to change. In the end customers received approximately 30 basis points off the older fixed rates that were being offered. A typical 1 year rate at the moment (if you have at least 20% equity in your home) is 3.55%.

What’s next?

There is likely to be a number of further drops to the OCR although there may only be one more in 2019. Some commentators are placing the eventual low at around .25% (Currently 1%). However how much of these further drops are passed onto the consumer remains to be seen.

The best term to pick at the moment is the 1 or 2 year term. I favour the 1 year term the most as it gives the mortgage holder the ability to take advantage of future drops on the OCR.

If you would like a review of your mortgage or help with your next loan rollover feel free to contact Scott Miller on 021 343 648

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