Chapter 1: What is the main topic discussed in this episode?
Hey team, it's Frances. Look, coming to you as a little bit of the bad news fairy once again, with a warning. The low interest rate era had a good run, but it's done now. There's conflict in the Middle East pushing up oil prices, inflation is back on the radar, and the Reserve Bank is making increasingly pointed noises about rate hikes.
Chapter 2: What warning does Frances Cook give about interest rates?
So really, we've hit a point where the question isn't any longer, Will mortgage rates go up? It's how fast and what do I do about it? We've got ANZ, which is our biggest bank, now expecting three OCR increases this year. They're predicting as early as July. ASB is penciled in September.
Chapter 3: What factors are contributing to the rise in interest rates?
And then Infometrics has said maybe even as early as May. Basically, everyone's agreeing on the direction.
up it's just a matter of when while i do sometimes come in here with the bad news like this the point is always what can you do about it where to from here so that's what i went on tvnz breakfast earlier this week to talk about they were kind enough to say i could put that here for you as well so you can have a little listen to that conversation and hopefully get some good tips and tricks hope it helps
welcome back to breakfast 18 minutes past six homeowners may need to buckle up as interest rates are set to rise again it comes as costs continue to spike with conflict in the middle east driving oil prices and inflation higher new interest rate data is set to roll out this morning for a preview and hopefully some guidance some hope we're joined by independent financial journalist francis cook a good morning what can we expect to see with these interest rate rises
I mean, it's all timing. It might not be today, but it will be soon. Interest rates are going up again, basically. That's what all of the smart people who watch these things are saying. Some are saying May, some are saying July, some are saying September. All the smart people are saying we are going to get interest rate rises from here. One direction, up.
And it could be three lots of interest rate rises across the course of the year. So buckle up, basically.
All right. So it's potentially a bit of a perfect storm of pain for a lot of people. How can people prepare with everything that's going on right now?
Yeah, I feel like every time I come on these days, I'm the bad news fairy. It's not great.
Delivered with such grace. So don't worry about that. Always such great advice. Exactly. Don't worry about that.
Yeah, we control what we can control, right? So we look at what's going on and we say, what can we do about it? So basically, it's looking at what can you control in this sort of situation, especially if you're a homeowner. A lot of people have been hanging out there and saying, oh, maybe interest rates will go a little bit lower. Maybe I can catch something a bit better for the mortgage.
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Chapter 4: What should homeowners do to prepare for rising interest rates?
And we are notorious here in New Zealand for not negotiating and not moving, not shopping around. It's one of the reasons that we do pay higher prices for things. So have a little look around what different banks are offering. Just send in a couple of requests. It can be as simple as by email. Ask them, you know, what's the best rate you could give me?
Take it back to your bank and say, can you match this? And if that sounds like a lot of legwork, then maybe ask a mortgage advisor. But if you think about that might take you a couple of hours of research and sending in requests and it could save you thousands, which is a really good hourly rate. So if you're feeling a bit reluctant to do it, think of the hourly rate. It's a great one.
What about the admin? What if people are thinking, oh, but the thought of changing banks, it seems like a lot of work.
Well, open banking came in from the tail end of last year, and it does make things like that a bit easier. So it has been a real pain before. Whereas now, if you're trying to switch banks, it's a lot easier to do that. But also just hold your banks fit to the fire and ask them to match things they almost always do. They don't want to lose customers.
What about if you're looking at break fees? When it comes time to redoing your mortgage, say, and you're looking at the interest rates, is it always going to be expensive to have to have a break fee? Or can actually sometimes the banks come to the party and help you out a little bit there?
Well, yeah, exactly, they can sometimes. So sometimes in order to lure you across, this is why banks will give things like the cashbacks. They give you those, you know, sometimes several thousand dollar payments to lure you across to them. But you can also, you know, this is where a mortgage advisor can really shine. And I think a lot of people forget a mortgage advisor is free to you.
They, pure standard, they charge the banks for that. You really don't get much at all in the way of costs. You can go there, get some free advice. They look at your situation and they help you figure out the best deal for you. So if you're worried about something like a break fee, going and talking to a mortgage advisor can really help there as well.
I would say as well, you know, you mentioned before about floating.
which can be a great way to give yourself some flexibility if you're in the type of job where you get bonuses or you're freelancing and your money can be a bit lumpy, you're trying to pay off extra on the mortgage, then okay, floating can work to pay off a little extra on the mortgage, but it is almost always the most expensive option. Don't forget that you can split up your mortgage.
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