Fixed rate mortgages soften blow
Competitive fixed-mortgage rates are keeping Palmerston North home buyers quiet after the official cash rate was increased again, says a Manawatu mortgage advisor.
The Reserve Bank has raised the official cash rate (OCR) to 3.25 per cent, with further increases expected.
The increase, the third since March, was by .25 basis points.
Craig Seton, from Mortgage Link Manawatu, said he expected more people to switch to fixed mortgage rates after yesterday's announcement. He said he thought people were not as stressed by the news as they had been by the first increase earlier this year.
He believes that's down to competitive fixed rates.
Some of his clients had changed to a fixed rate shortly after the announcement yesterday.
"Any news about rate increases does concern the market.
"People probably aren't noticing too much impact on their budgets," he said.
The rise would probably affect those with large mortgages.
"I don't think it's a major problem. People still buy houses; at this stage it hasn't put people off.
"People were buying houses even when interest rates were at 20 per cent."
Shortly after the Reserve Bank announcement, ANZ announced it would raise its floating and flexible rates by 0.25 percentage points this month.
Nardia Cooper wrote on the Manawatu Standard Facebook page that she had a small portion of floating rates, and said the increases over the year had not made a huge difference.
"It all comes down to being prepared, and knowing what you can truly afford before buying."
Real Estate Institute New Zealand Manawatu spokesman Andy Stewart said Palmerston North shouldn't expect any major repercussions from the hike.
"From the housing market point of view, I don't think it will have any major effect locally in our city."
If it was just rate increases, there wouldn't be any major issues, Stewart said. "The main problem we have in our market is LVR [loan-to-value ratio].
"Cash rate increases coupled with LVR does create problems."
LVRs were introduced earlier this year to tackle rising house prices in Auckland and Christchurch by requiring the majority of home owners to have at least a 20 per cent deposit.