BNZ and KiwiBank are the latest banks to announce cuts to mortgage rates.
ANZ and Westpac had already dropped rates earlier in the week, leaving ASB as the last remaining big bank to hold back cuts at this state.
Finance and Mortgage Advisors Association country manager Leigh Hodgetts joined Jack Tame.
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Episode Transcript
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Speaker 1 (00:00):
Team B and Z and kew We Bank are the
latest banks to announce cuts to their mortgage rates today,
even if you can't log into the kew We Bank
online banking at the stage, A and Z and Westpac
had already dropped their rates earlier in the week, and
so ASB is now the only one of the big
banks to hold back a cut at this stage. Lee
Hodgits is from the Finance and Mortgage Advisors Association Gilder
(00:24):
Good Evening, Jack, So, what do you reckon? The banks
are just looking at that inflation data from the Consumer
Price Index earlier this week thinking the time is right.
Speaker 2 (00:33):
Well, we'd like to hope so consumers have done what's
been asked of us. We pull back on spending, and
I think everyone's looking for a reward or a life
at the end of the tunnel, and that will come
in some intra straight reduction and some relief, hopefully before
the end of the year.
Speaker 1 (00:47):
So to what extent do you think, given these most
recent cuts, the cuts are already essentially baked into retail
interest rates.
Speaker 2 (00:57):
Yeah, well, we're looking at that or the data that's
being apparent from the drop in the lending rates anywhere
from six months through five year rates at the moment
across the board, and you called it out there. Apart
from ASP haven't moved at this point though you know,
there's some definite reduction and cuts already calculated into the
rates that we're seeing at the moment. So I guess
(01:20):
there's a confidence. It's not when the rates will drop,
it it's when, sorry, not if, but when and also
by how much is that going to be?
Speaker 1 (01:28):
So, for example, if indeed the Reserve Bank kind of
continues on its most recent trajectory, acknowledging that they have
kind of moved a little bit in the last six
or seven weeks, but if they continue on this trajectory
where it looks like a rate cut in November is
likely and we get a twenty five point basis cut,
are we going to see the banks immediately lower interest
rates or do you reckon by that point? If it happens,
(01:50):
then it's all going to kind of be locked in.
Speaker 2 (01:53):
Well, we're calling for the banks to pass on those
intrast rate reductions as soon as as possible. They need
to do the right thing by the consumer. We need
to see that drop in this year as well. If
it does go down point two five percent. We might
be hopeful we'll see another drop early next year, but
it's a long time between November and when the Reserve
(02:14):
Bank does meet again and check the OCR in the
new year.
Speaker 1 (02:17):
So, if I was to go about refixing my mortgage,
would you recommend asking the banks to do better than
their advertised rates.
Speaker 2 (02:27):
Look, you can do that. You're always entitled to ask
for a better rate, and also you can consider different factors.
We could split mortgages over six or twelve months into
a little bit of hedging about what the rates would
look like. And Look, my recommendation coming from an association
is gone talk to a professional and get some advice.
(02:50):
Mortgage advisors have access to everything, all the rates, they
can see where the movements are in the banks, and
sometimes they can have a bit of bargaining power there
on your behalf because they have all that access of
the information that there's fingertips, And it's always a good
opportunity to talk to someone and get some advice about
the best product, the best structure, all the benefits that
come with the different products and loans that you're getting,
(03:12):
and get some really good advice and you'll get some
good outcomes. From that going down that pathway as well.
Speaker 1 (03:17):
How is the sentiment in your industry at the moment.
How are mortgage advisors feeling about this economic moment.
Speaker 2 (03:25):
Well, it's tough. Everyone's doing it tough. So we've got
homeowners doing it tough with high interstrates, business people, business owners,
which most mortgage advisors are clearly, So everyone is doing
it a little bit tough, and we're just really looking
for some positive signs. And I think we are seeing
a light at the end of the tunnel, and I
think the sentiment will come in and kick in really
quickly once we see a reduction in interest rates, even
(03:47):
if it's a small one to start with. I think
it will just give the consumers confidence in New Zealand
a little bit of a breath to take to move
ahead and spend a bit more money and be more
comfortable and be able to afford the things that we'll
struggling to at the moment. Unfortunately.
Speaker 1 (04:01):
Yeah, I mean we have seen house sales, you know,
really significantly drop compared to the rate of sales during
more prosperous times. So when there happens, does that directly
affect your industry and that do fewer house sales mean
that mortgage advisors go through a much tougher time.
Speaker 2 (04:22):
Look, they can do, but in the times where they're
not writing as much business or helping as many kinds
with buying new properties, they're helping people refix, They're helping
people work out how they can afford their mortgages, looking
at different interest rate opportunities. They're spending a lot of
time helping out people and giving people advice. So they're very,
very busy at the moment. It may not be new lending,
(04:44):
but they're certainly they're looking after their customers and trying
to get good outcomes for them so that they can
afford and keep the houses. And that's the most important
thing is keeping keywads in their houses. Right.
Speaker 1 (04:55):
So, when the Reserve Bank does start cutting rates, is
that relief likely to filter through to mortgage holders because
a lot of people will be locked into mortgages that
extend beyond that first come Yeah.
Speaker 2 (05:09):
Yeah, So, I mean a lot of people have been
factoring in even over the last the most part of
this year and even early last year, just taking the
six or twelve months sixed rate. Not many people are
brave enough to be sitting out there on variable rates,
we found, but we'll find a lot of people are
have factored that in it will be coming off their
fixed straight loans towards the end of the year. So
(05:29):
with a bit of good advice, you might be able
to just work that through and then roll over into
a lower rate again. So most of people have come
off their very very low rate that they were fixed
on over the last few years. So I think a
lot of people have been factoring this. Then they've had
some advice up, they've been they wrapped their head around
it because we've all had to and yeah, looking forward
(05:52):
to that bit of a decline in the interest rates
and making it more affordable.
Speaker 1 (05:56):
Right, Okay, So is there a kind of orthodoxy when
it comes to refixing your mortgage in this kind of
economic environment because over the last in a few years,
a lot more key we have chosen to split up
their mortgage than perhaps they did in the past.
Speaker 2 (06:11):
Yeah. True, true. So that's a really good, a good point. So,
I mean I can talk to that I have about
three different mortgages all on the one house, but I
fixed the rates over different periods of time. They may
have been for a renovation or something else that I've done.
But I also make sure that you just you shop around,
you look at the interest rates. I've got a great
(06:31):
mortgage advisor too, by the way, so that's super helpful.
But I just you look at what suits you the best.
But there's always options. You don't have to be at
one bank and have one loan fixed in at one rate.
You've got the opportunity to stagger it a little bit,
which helps you when things come off or go up.
So it's very good strategy.
Speaker 1 (06:50):
Ah, very good. Hey, thanks so much, Lee, I appreciate
your time. That is Lee Hodgets the Finance and Mortgage
Advisors Association. For more from Hither, duplessy El and Drive,
listen live to news Talks it B from four pm weekdays,
or follow the podcast on iHeartRadio
Team B and Z and kew We Bank are the
latest banks to announce cuts to their mortgage rates today,
even if you can't log into the kew We Bank
online banking at the stage, A and Z and Westpac
had already dropped their rates earlier in the week, and
so ASB is now the only one of the big
banks to hold back a cut at this stage. Lee
Hodgits is from the Finance and Mortgage Advisors Association Gilder
(00:24):
Good Evening, Jack, So, what do you reckon? The banks
are just looking at that inflation data from the Consumer
Price Index earlier this week thinking the time is right.
Speaker 2 (00:33):
Well, we'd like to hope so consumers have done what's
been asked of us. We pull back on spending, and
I think everyone's looking for a reward or a life
at the end of the tunnel, and that will come
in some intra straight reduction and some relief, hopefully before
the end of the year.
Speaker 1 (00:47):
So to what extent do you think, given these most
recent cuts, the cuts are already essentially baked into retail
interest rates.
Speaker 2 (00:57):
Yeah, well, we're looking at that or the data that's
being apparent from the drop in the lending rates anywhere
from six months through five year rates at the moment
across the board, and you called it out there. Apart
from ASP haven't moved at this point though you know,
there's some definite reduction and cuts already calculated into the
rates that we're seeing at the moment. So I guess
(01:20):
there's a confidence. It's not when the rates will drop,
it it's when, sorry, not if, but when and also
by how much is that going to be?
Speaker 1 (01:28):
So, for example, if indeed the Reserve Bank kind of
continues on its most recent trajectory, acknowledging that they have
kind of moved a little bit in the last six
or seven weeks, but if they continue on this trajectory
where it looks like a rate cut in November is
likely and we get a twenty five point basis cut,
are we going to see the banks immediately lower interest
rates or do you reckon by that point? If it happens,
(01:50):
then it's all going to kind of be locked in.
Speaker 2 (01:53):
Well, we're calling for the banks to pass on those
intrast rate reductions as soon as as possible. They need
to do the right thing by the consumer. We need
to see that drop in this year as well. If
it does go down point two five percent. We might
be hopeful we'll see another drop early next year, but
it's a long time between November and when the Reserve
(02:14):
Bank does meet again and check the OCR in the
new year.
Speaker 1 (02:17):
So, if I was to go about refixing my mortgage,
would you recommend asking the banks to do better than
their advertised rates.
Speaker 2 (02:27):
Look, you can do that. You're always entitled to ask
for a better rate, and also you can consider different factors.
We could split mortgages over six or twelve months into
a little bit of hedging about what the rates would
look like. And Look, my recommendation coming from an association
is gone talk to a professional and get some advice.
(02:50):
Mortgage advisors have access to everything, all the rates, they
can see where the movements are in the banks, and
sometimes they can have a bit of bargaining power there
on your behalf because they have all that access of
the information that there's fingertips, And it's always a good
opportunity to talk to someone and get some advice about
the best product, the best structure, all the benefits that
come with the different products and loans that you're getting,
(03:12):
and get some really good advice and you'll get some
good outcomes. From that going down that pathway as well.
Speaker 1 (03:17):
How is the sentiment in your industry at the moment.
How are mortgage advisors feeling about this economic moment.
Speaker 2 (03:25):
Well, it's tough. Everyone's doing it tough. So we've got
homeowners doing it tough with high interstrates, business people, business owners,
which most mortgage advisors are clearly, So everyone is doing
it a little bit tough, and we're just really looking
for some positive signs. And I think we are seeing
a light at the end of the tunnel, and I
think the sentiment will come in and kick in really
quickly once we see a reduction in interest rates, even
(03:47):
if it's a small one to start with. I think
it will just give the consumers confidence in New Zealand
a little bit of a breath to take to move
ahead and spend a bit more money and be more
comfortable and be able to afford the things that we'll
struggling to at the moment. Unfortunately.
Speaker 1 (04:01):
Yeah, I mean we have seen house sales, you know,
really significantly drop compared to the rate of sales during
more prosperous times. So when there happens, does that directly
affect your industry and that do fewer house sales mean
that mortgage advisors go through a much tougher time.
Speaker 2 (04:22):
Look, they can do, but in the times where they're
not writing as much business or helping as many kinds
with buying new properties, they're helping people refix, They're helping
people work out how they can afford their mortgages, looking
at different interest rate opportunities. They're spending a lot of
time helping out people and giving people advice. So they're very,
very busy at the moment. It may not be new lending,
(04:44):
but they're certainly they're looking after their customers and trying
to get good outcomes for them so that they can
afford and keep the houses. And that's the most important
thing is keeping keywads in their houses. Right.
Speaker 1 (04:55):
So, when the Reserve Bank does start cutting rates, is
that relief likely to filter through to mortgage holders because
a lot of people will be locked into mortgages that
extend beyond that first come Yeah.
Speaker 2 (05:09):
Yeah, So, I mean a lot of people have been
factoring in even over the last the most part of
this year and even early last year, just taking the
six or twelve months sixed rate. Not many people are
brave enough to be sitting out there on variable rates,
we found, but we'll find a lot of people are
have factored that in it will be coming off their
fixed straight loans towards the end of the year. So
(05:29):
with a bit of good advice, you might be able
to just work that through and then roll over into
a lower rate again. So most of people have come
off their very very low rate that they were fixed
on over the last few years. So I think a
lot of people have been factoring this. Then they've had
some advice up, they've been they wrapped their head around
it because we've all had to and yeah, looking forward
(05:52):
to that bit of a decline in the interest rates
and making it more affordable.
Speaker 1 (05:56):
Right, Okay, So is there a kind of orthodoxy when
it comes to refixing your mortgage in this kind of
economic environment because over the last in a few years,
a lot more key we have chosen to split up
their mortgage than perhaps they did in the past.
Speaker 2 (06:11):
Yeah. True, true. So that's a really good, a good point. So,
I mean I can talk to that I have about
three different mortgages all on the one house, but I
fixed the rates over different periods of time. They may
have been for a renovation or something else that I've done.
But I also make sure that you just you shop around,
you look at the interest rates. I've got a great
(06:31):
mortgage advisor too, by the way, so that's super helpful.
But I just you look at what suits you the best.
But there's always options. You don't have to be at
one bank and have one loan fixed in at one rate.
You've got the opportunity to stagger it a little bit,
which helps you when things come off or go up.
So it's very good strategy.
Speaker 1 (06:50):
Ah, very good. Hey, thanks so much, Lee, I appreciate
your time. That is Lee Hodgets the Finance and Mortgage
Advisors Association. For more from Hither, duplessy El and Drive,
listen live to news Talks it B from four pm weekdays,
or follow the podcast on iHeartRadio
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