Jenee Tibshraeny: NZ Herald Wellington business editor on whether homeowners have missed the perfect time to fix

Experts have indicated the Reserve Bank could be done cutting the OCR for the moment, and there's questions about what this could mean for homeowners.

The window of time borrowers had to lock in longer term fixed rates after the OCR cut and before they started rising was narrow, and reports indicate they could have missed their chance.

NZ Herald Wellington business editor Jenee Tibshraeny explained further.

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Episode Transcript

Speaker 1 (00:00):
Brady and Bread read. With interest rates falling over the
course of the last year, borrowers have been tossing up
when to fix and for how long as you know.
In hindsight, it now looks that a significant number of
homeowners who tried to pick the trough in the cycle
actually missed it. Jane Tips Trainey is the herold's Wellington
Business Editor's been looking at this. Janey, good evening. Hi, Ryan,

(00:22):
So if you're still waiting now, you've waited too long,
haven't you?

Speaker 2 (00:26):
Okay? I mean you never say never. As you just described,
we live in a crazy world. But from what we
currently see, it seems like the fixed interest rates at
least it seems like they reached their bottom and around
November in December they actually started tracking up. And based
on the new economic data we've had come out this year,

(00:49):
it seems like the economy is actually doing okay. We've
got manufacturing as strong, services sector is strong. Seems like
actually the riskers that we might have a bit more
inflation and expected, which suggests it's very unlikely that OCR
will fall further. So it really does seem like we've
had the lowest of the rates. It seems like we've

(01:10):
already seen them.

Speaker 1 (01:12):
You've been looking at how many were trying to pick
the trough, how many people were betting on rates dropping
further after the last OCR cut in November, Right.

Speaker 2 (01:23):
Yeah, that's right. So the Reserve Bank collects all this
mortgage data from banks and according to that data, in November,
that's for the latest time that we have it for
about half of new mortgage lending done in November was
floating versus fixed, So that is actually in November that
was a super high percentage. In fact, it was forty

(01:46):
nine percent. That was the highest percentage on the Reserve
Banks records that go back to twenty twenty one. It
was the highest percentage of a new mortgage lending that
was floating. So you know, that suggests to me that
a whole bunch of people no November thought we'll sit
tight for a bit, We'll wait for interest rates to
fall further. Once they do, then we'll lock in for

(02:07):
like two years or three years, even eighteen months, but
will just sit tight for a bit longer. So what
ended up happening for those people was that in late
November the Reserve Bank did cut the o CR, but
the market after that was surprised by some of the
Reserve Banks commentary, and interest rates actually started rising. So

(02:29):
you know, I don't know if our listeners and readers recall,
but you know there was a sort of like a
flurry of banks lifting their longer term interest rates in December.
So for all those people who in November, there's a
large portion of them waiting for the for the cuts.
The OCR cut did come, but then unexpectedly the market

(02:49):
started going north because it was surprised by the Reserve
Banks commentary. So if they did, you know, at that
point want to rush to fix, that would have been
a pretty short time. Between the Reserve Bank cutting the
OCR in late November and banks lifting lifting rates, they
would have had probably only a few weeks to rush
in and lock in those those rates. You know. I

(03:12):
talked to a mortgage broke and he said, yes, there
was a big flurry. People did rush you know, but
of course you have to It is interesting to look
at the starter, but you do have to look at
the bigger picture. Thirty year mortgage, twenty year mortgage. You know,
there are all sorts of ups and downs, but you know,
it's interesting. It is interesting nonetheless, and you know, if
you have a big mortgage, A few percentage points does

(03:33):
make a difference.

Speaker 1 (03:34):
I was going to say, what do we know what
the difference you know, if you've got a million dollar mortgage,
would it in the scheme of things, be a massive
difference to you whether you you know, whether you in November,
December or January.

Speaker 2 (03:48):
So the hikes that the banks did was they lifted
their longer term rates by about thirty basis points, So
you know that's a notable lift. I mean, it probably
depends on how price sensitive you are, and you know,
whether you were if you were part of that cohort
that was trying to time the market sitting there on floating,

(04:09):
you know, paying a bit more to be on floating,
waiting to pick the bottom, then you know you might
have been a bit disappointed. Probably depends on your you know,
your your view on these things as to how gutting
that would be.

Speaker 1 (04:23):
Yeah, Jna, good to have you on the show as always.
Jenay tips Trainey is The Herald's Wellington Business editor and
has a story out in the Herald about all of this.
You can go and read it ended Herald dot co
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