August 23, 2024 • 5 mins
The OCR cut has seen banks lower their rates – some cutting multiple times. But how low will they go? And what impact will this have? Lisa Dudson joined Jack Tame to run through the details.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack team podcast
from News Talks at Me.
Speaker 2 (00:12):
It's time to talk money, and Lisa Dudson is with
us this morning.
Speaker 3 (00:16):
Killed her Good morning Jack.
Speaker 2 (00:18):
Oh well, it was the sigh of relief heard around
the country, wasn't it. The ocr having its first cut
just twenty five basis points for the time being, after
a period of extended pain for many mortgage holders. But
how do you think the average person with a mortgage
is actually going to be reacting to this? When are
we really going to see some significant change?
Speaker 3 (00:40):
Yeah? Well, I mean, look, it's good news, no doubt
about that, right, But there's there's a big lag and
that's a challenge, right because you know, interstrates went up
quite significantly two years or so ago, but the pain
has been felt more this year than last year. So
you know what we find now obviously his ingistrates are
starting to come down. There's lots of little cuts. I think,
you know this five point nine to nine percent eighteen months,
(01:02):
which is you know, that's pretty attractive. We'll probably see
you know, I'm not economists, but most people I've seen
to talk to you think will be well into the
low f lives by the end of next year. That's
crystal ball gazing all with it. But so you know,
so that's all good, right, But the challenge is is
in New Zealands, most people have their interest rates fixed,
so they're locked in for a period of time, so
(01:23):
they won't get the benefit of that until the moll
wall just come off those fixed rates, which could be six, twelve,
eighteen months, two years away.
Speaker 2 (01:32):
Yeah, this is the and so this is why when
I mean it works in both directions. Right when the
ocr was being increased, it took a bit of time
for the full impact of those increases to actually hit homeowners.
Now the same thing happens in reverse.
Speaker 3 (01:46):
That's right, And I think I think the note of
caution too is that you do have to be mindful
about breaking your six term LUNs, right, because that's what
a lot of people do. They go great with I've
got a seven in my and my rates at the
second ash, I can get down to five point nine
to nine. Let's go and break the rate and refix
the low rate. However, that's not easy because what happens
(02:07):
is the banks penalize you for breaking both rights. So
if you have got that, if that's in your headspace
and you're thinking about that, Please please go and see
your mortgage divisor and just work through the implications of that,
because for most people you're just going to have to
write it out.
Speaker 2 (02:22):
Yeah, that's right, and it's not too complex to do
the sums right like sometimes there can be a little
bit of a difference, but for the most part, I mean,
the banks are very much, you know, very familiar with
this concept, so you know that they will you know
there will be penalties and implications if you do decide
to break. How do you think also, how do you
think then that people who are going to be fixing
sometimes soon should be should be thinking about the trajectory
(02:46):
for interest rates in the OCR over the next wee.
Speaker 3 (02:49):
While I don't think they need dispute that it's going
to be heading south, right, So I guess that if
you've got a extreme rate coming up for you'll fairly
soon you again talk to your mortgage avisor and get
some advice, but you probably want to be looking at
six months and just rolling those six months until those
rates come down. Although having said that, though you know,
(03:10):
five point ninety nine is probably not too bad for
eighteen months because if it's that averaging out that you
need to you know, consider So for instance, if you've
got you know, you're locking something into eighteen months, what
is the amount of interesues you're paying versus three six months?
Roll over it? Yeah?
Speaker 2 (03:28):
Yeah, Do you reckon that the banks are going to
be really competitive over this?
Speaker 3 (03:34):
I don't know.
Speaker 2 (03:35):
I mean no, but I mean, I just it's funny
because you know, like people get excited, right so this
feels like there's you know, like mortgage holders are kind
of excited about the about the direction of interest rates
over the next wee while. And I just wonder if
if they are likely to be more competitive as rates
(03:56):
are increasing or as rates are going down. It'll be
interesting to see, you know.
Speaker 3 (04:02):
When they're quite proactive with the pups because I think,
you know, there is a bit of data right there
that they making lots cuts, but they all be at
their tiny cap and you know, and when they get
the cuts, they get a bit of eartime and a
bit of media coverage, right, so that's quite good for
their branding. But banks make good margins, and you know,
they make better margins than what they do in Australia
in general, and you know they're going to be holding
(04:22):
onto those margins and they need to hold onto those
margins because they have a responsibility to the shaarholders as well.
Yeah right, so you know, you know, it's hard to
answer that.
Speaker 2 (04:30):
Yeah, I don't know if they'd be more more likely
to be competitive on the way up and more likely
to be competitive on the way down. Something tells me
that the end of the day, just like the because
you know, the banks win.
Speaker 3 (04:40):
Yeah yeah, yeah, well that's rights. You just need to
look at the year prices and they do it into
the shaarholders and the last you know, we run and
they've always been a you know, a great stock to
invest them.
Speaker 2 (04:49):
Yeah yeah, yeah, exactly. Well, like you say, though, some
reason for optimism from mortgage holders. Thank you so much, Lisa, Lisa,
welcome Lisa duds in there.
Speaker 1 (04:58):
For more from Saturday Morning with Jack Tame. Listen live
to news talks that'd be from nine am Saturday, or
follow the podcast on iHeartRadio.
You're listening to the Saturday Morning with Jack team podcast
from News Talks at Me.
Speaker 2 (00:12):
It's time to talk money, and Lisa Dudson is with
us this morning.
Speaker 3 (00:16):
Killed her Good morning Jack.
Speaker 2 (00:18):
Oh well, it was the sigh of relief heard around
the country, wasn't it. The ocr having its first cut
just twenty five basis points for the time being, after
a period of extended pain for many mortgage holders. But
how do you think the average person with a mortgage
is actually going to be reacting to this? When are
we really going to see some significant change?
Speaker 3 (00:40):
Yeah? Well, I mean, look, it's good news, no doubt
about that, right, But there's there's a big lag and
that's a challenge, right because you know, interstrates went up
quite significantly two years or so ago, but the pain
has been felt more this year than last year. So
you know what we find now obviously his ingistrates are
starting to come down. There's lots of little cuts. I think,
you know this five point nine to nine percent eighteen months,
(01:02):
which is you know, that's pretty attractive. We'll probably see
you know, I'm not economists, but most people I've seen
to talk to you think will be well into the
low f lives by the end of next year. That's
crystal ball gazing all with it. But so you know,
so that's all good, right, But the challenge is is
in New Zealands, most people have their interest rates fixed,
so they're locked in for a period of time, so
(01:23):
they won't get the benefit of that until the moll
wall just come off those fixed rates, which could be six, twelve,
eighteen months, two years away.
Speaker 2 (01:32):
Yeah, this is the and so this is why when
I mean it works in both directions. Right when the
ocr was being increased, it took a bit of time
for the full impact of those increases to actually hit homeowners.
Now the same thing happens in reverse.
Speaker 3 (01:46):
That's right, And I think I think the note of
caution too is that you do have to be mindful
about breaking your six term LUNs, right, because that's what
a lot of people do. They go great with I've
got a seven in my and my rates at the
second ash, I can get down to five point nine
to nine. Let's go and break the rate and refix
the low rate. However, that's not easy because what happens
(02:07):
is the banks penalize you for breaking both rights. So
if you have got that, if that's in your headspace
and you're thinking about that, Please please go and see
your mortgage divisor and just work through the implications of that,
because for most people you're just going to have to
write it out.
Speaker 2 (02:22):
Yeah, that's right, and it's not too complex to do
the sums right like sometimes there can be a little
bit of a difference, but for the most part, I mean,
the banks are very much, you know, very familiar with
this concept, so you know that they will you know
there will be penalties and implications if you do decide
to break. How do you think also, how do you
think then that people who are going to be fixing
sometimes soon should be should be thinking about the trajectory
(02:46):
for interest rates in the OCR over the next wee.
Speaker 3 (02:49):
While I don't think they need dispute that it's going
to be heading south, right, So I guess that if
you've got a extreme rate coming up for you'll fairly
soon you again talk to your mortgage avisor and get
some advice, but you probably want to be looking at
six months and just rolling those six months until those
rates come down. Although having said that, though you know,
(03:10):
five point ninety nine is probably not too bad for
eighteen months because if it's that averaging out that you
need to you know, consider So for instance, if you've
got you know, you're locking something into eighteen months, what
is the amount of interesues you're paying versus three six months?
Roll over it? Yeah?
Speaker 2 (03:28):
Yeah, Do you reckon that the banks are going to
be really competitive over this?
Speaker 3 (03:34):
I don't know.
Speaker 2 (03:35):
I mean no, but I mean, I just it's funny
because you know, like people get excited, right so this
feels like there's you know, like mortgage holders are kind
of excited about the about the direction of interest rates
over the next wee while. And I just wonder if
if they are likely to be more competitive as rates
(03:56):
are increasing or as rates are going down. It'll be
interesting to see, you know.
Speaker 3 (04:02):
When they're quite proactive with the pups because I think,
you know, there is a bit of data right there
that they making lots cuts, but they all be at
their tiny cap and you know, and when they get
the cuts, they get a bit of eartime and a
bit of media coverage, right, so that's quite good for
their branding. But banks make good margins, and you know,
they make better margins than what they do in Australia
in general, and you know they're going to be holding
(04:22):
onto those margins and they need to hold onto those
margins because they have a responsibility to the shaarholders as well.
Yeah right, so you know, you know, it's hard to
answer that.
Speaker 2 (04:30):
Yeah, I don't know if they'd be more more likely
to be competitive on the way up and more likely
to be competitive on the way down. Something tells me
that the end of the day, just like the because
you know, the banks win.
Speaker 3 (04:40):
Yeah yeah, yeah, well that's rights. You just need to
look at the year prices and they do it into
the shaarholders and the last you know, we run and
they've always been a you know, a great stock to
invest them.
Speaker 2 (04:49):
Yeah yeah, yeah, exactly. Well, like you say, though, some
reason for optimism from mortgage holders. Thank you so much, Lisa, Lisa,
welcome Lisa duds in there.
Speaker 1 (04:58):
For more from Saturday Morning with Jack Tame. Listen live
to news talks that'd be from nine am Saturday, or
follow the podcast on iHeartRadio.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.