Cash-rate cut benefits new home owners

WILL HINE in Queenstown - The Southland Times | Friday, 30 January 2009

HAPPY: Recent home buyers Christian Chester and Amy Taylor, of Queenstown, look set to benefit after the Reserve Bank yesterday slashed 1.5 percentage points off the Official Cash Rate, leading lenders to drop their interest rates.

The decrease in interest rates could not have come at a better time for Queenstown couple Christian Chester and Amy Taylor, who settled on a $520,000 property in Fernhill on January 19.

Ms Taylor said her mortgage broker Mark Pullar, of Roost Mortgage Brokers, "pulled out all sorts of miracles" in working to get her and Mr Chester the lowest rate possible.

"He anticipated this new rate drop was coming.

"He put us on a floating rate for a week ... and then he's going to fix it for six months next week to take advantage of the lower rate."

Once the six months was up, the couple would again review fixed rates, which Ms Taylor hoped would have dropped even further.

Assuming the rates seemed to be at a market low then, the couple would take a fixed term mortgage for a prolonged period, she said.

Mr Pullar, who owns the Queenstown and Southland Roost franchise, said current rate movement was encouraging mortgage holders to float in the short-term and pick up a fixed term deal when rates bottom out.

With interest rates falling in the past six months there had been an increase in the number of people interested in breaking their fixed term mortgages, he said.

"If they were fixed six months ago for two years at nine-point-something, they're really noticing quite a lot cheaper rates.

"But, a lot of them are finding the break fees are quite hefty."

Mr Pullar emphasised breaking a fixed term mortgage might not be in the best interests of all borrowers.

"It really depends on each customer's circumstances. It depends on their interest rate, how long they're locked in for, and their bank."

will.hine@stl.co.nz