Mortgage interest rates have a significant impact on the cost of borrowing money to buy a home or invest in property. In New Zealand, as in many other countries, mortgage rates can be affected by a range of economic and financial factors, including inflation, employment, government policies, global market conditions, and more. As such, it can be challenging to predict the future trajectory of interest rates with complete accuracy, as unforeseen events or developments can change the outlook.
However, there are some indicators that can give us a general idea of where mortgage rates might be headed in the coming years. For example, the Reserve Bank of New Zealand (RBNZ) is responsible for setting the official cash rate (OCR), which is the interest rate at which banks can borrow money from the central bank. The OCR, in turn, can influence the interest rates that banks offer to customers, including mortgage borrowers.
As of 2021, the OCR is at a historic low of 0.25%, due to the impact of the COVID-19 pandemic on the economy. This has led to record-low mortgage rates, making it a favorable time for borrowers to lock in fixed-rate mortgages or refinance their existing loans. However, the RBNZ has signaled that it may start to raise the OCR in 2022 or 2023, as the economy recovers and inflation pressures build up. This could lead to an increase in mortgage rates, although the magnitude and timing of the change are uncertain.
Some experts predict that mortgage rates could start to rise in late 2022 or early 2023, depending on how the global and domestic economic conditions evolve. Opes Partners, a New Zealand-based mortgage brokerage firm, notes in its interest rate predictions that “there is a possibility that interest rates could rise more quickly than expected, which may impact the cost of borrowing.” However, Opes Partners also highlights that there are many factors that could affect interest rates in the coming years, including the strength of the housing market, the level of consumer and business confidence, and the actions of the RBNZ.
Overall, it’s important for borrowers to stay informed about the latest interest rate developments and seek expert advice from mortgage brokers or financial advisers when making borrowing decisions. While it’s difficult to predict exactly what will happen with mortgage rates in 2023 and beyond, being proactive and well-informed can help borrowers save money and avoid potential risks. With the help of Infinity Loans, you can stay ahead of the curve and make smart choices for your mortgage needs. Contact us today to learn more about our mortgage broker services.