Lowering Interest rates in New Zealand – what does it mean for Migrants to New Zealand?

December 8, 2008 by
Filed under: Banks, Getting to New Zealand, Interest Rates, Credit Cards & Mortgages in NZ, Life in New Zealand, Property & General Investing 

For the past 3 years in New Zealand, Interest rates have been going one way – up. When we first took out our mortgage we could get around 7.5% on a two year fixed rate. By July this year – we were lucky to get under 10% as a fixed rate, and the floating rate was almost 11%. And things were looking a bit grim as rates were predicted to keep rising.

This happened because Alan Bollard, the governor of the Reserve Bank of New Zealand wanted us all to stop spending money and for house prices to go down. Which happened this year, as we were hit with

High Interest rates
High Petrol Prices
High Food Prices
High Heating bills
High House Prices.

So after a year of ratcheting the interest rates up really fast, the economy in New Zealand came to a screeching halt early this year.

So then, Mr. Bollard – without ever saying he may have stuffed things up a bit – started dropping the interest rates again. Only this time – he did it really, really fast. You see they went up about 0.5% every time he made an announcement, but going down – it’s happening at 1% or 1.5%.

This is pretty much the same all over in the western countries as we struggle with one helluva financial meltdown.

So what does it mean here in New Zealand, and what does it mean if you want to Emigrate to New Zealand.

Well, you can now get a fixed rate mortgage for 2 years at a pretty reasonable 6.85% to 7.2% at the major banks (Interest.co.nz). This is cheaper than it’s been at any time since we moved here 4 years ago,

Which is good news right? (Well for New Zealand anyway – where you need to remember that interest rates are always higher than in the UK). Only not quite so good for many people. Because the banks now want 20% deposits before lending any money – and in some cases 30% if you want to buy an investment property.

And not many people in New Zealand have that kind of savings. And with house prices in the UK dropping as well – as a migrant you may not have the 20% deposit either.

So – as if often the case – the banks giveth with one hand and nick it straight back with the other one.

When looking at your dream home on the Internet, remember that you may now need a big deposit. And also take into account that the lending rules from the banks are changing rapidly at the moment. We have just had a case where the National Bank held back our application for 3 days so that it would come under new finance rules and whereas we could have got 90% lending on a property, they would now look at only 80%.

If you are a migrant with some savings you can bring over – then you are in a VERY good bargaining position for you new dream home. So bargain hard! If you have no savings – then right now – it may be a bit tricky to get a mortgage!

Related posts:

  1. Will New Zealand’s interest rates fall again this week?
  2. Why are Credit Cards still charging such high interest rates in New Zealand?
  3. ASB Interest rate changes – humph!
«
»

Tags: , , , , ,

Comments

One Comment on Lowering Interest rates in New Zealand – what does it mean for Migrants to New Zealand?

  1. Stocks and Bonds » Blog Archive » Avalon’S Blog » Blog Archive » Lowering Interest Rates in New … on Tue, 9th Dec 2008 4:00 pm

    2. [...] Well, you can now get a fixed rate mortgage for 2 years at a pretty reasonable 6.85% to 7.2% at the major banks ( Interest.co.nz). This is cheaper than it’s been at any time since we moved here 4 years ago,. Which is good news right? …[Continue Reading] [...]

Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!