Adviser explains the growing trend
A Christchurch mortgage adviser says the number of New Zealanders refinancing their home loans is continuing to rise.
Become Wealth’s head of lending April Hastilow (pictured) said many of her clients are choosing to refinance their home loan rate for another fixed term, rather than switching to a variable rate.
“I am seeing a lot of people gritting their teeth and deciding to refix their mortgage with their current bank,” Hastilow said. “The difference between banks and what is on offer varies amongst lenders. It comes down to what lender best matches the client in their current circumstances.”
Hastilow said she was seeing rate negotiations happening between clients and banks.
“People are looking at their budgets and what their goals are moving forward. It makes sense to look at all your options before refixing your loan for a second, third or fourth time,” she said.
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Hastilow said a lot of people who are coming off or about to come off a fixed-term home loan would be in for a shock.
“There is now a massive difference for clients who are comparing their interest rates today opposed to 12 months ago,” she said. “For us as mortgage advisers, it makes it so worthwhile helping our clients to ensure they are happy with their new interest rate – whatever that might be.”
Hastilow said interest rates were taking up a lot of headline space in the media.
“It is causing angst for many people,” she said. “A lot of people are choosing to lock in a lower interest rate now with the hope of not too many more rises to the OCR this year.”
Hastilow said she was receiving a lot of enquiries from clients wanting to know when they could next refix their home loan interest rate.
“People are trying to get in front of the eight-ball and are starting to plan for what their new interest rate might be,” she said. “New Zealand has been in a low interest rate environment for a long time now. People often forget they were stress-tested at a much higher interest rate at the commencement of their loan.”
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Hastilow said home loans were more expensive now after the real estate price boom over the past two years.
“To combat this, clients need to have the best home loan structure, lowest rate possible and good cash contribution available at all times,” she said.
Hastilow said mortgage advisers had the advantage of having access to many lending options for their clients.
“There is some healthy competition between banks now, all who are fighting for potential customer business,” she said. “At the end of the day, we are working for the client and we have their best interest at front of mind. Refinancing is just a numbers game.”
