Mortgage advisor warns lowest mortgage rates since after WWII will be gone 'by the time Santa comes down the chimney'

November 15, 2018

Mortgage advisor Bruce Patten spoke to Breakfast about what’s driving the low rates.

Mortgage rates being offered by our big banks are the lowest they've been since just after WWII.

Banks are offering rates as low as 3.85 per cent. However, they aren't expected to stay that low for long.

Mortgage advisor Bruce Patten joined TVNZ’s Breakfast this morning to discuss what’s driving the low rates.

Mr Patten explained, "Every year, the banks come out around spring and bring out a special and I think this is just that time of year where they’re going, 'Let's put something out, get some activity, market's been a little but suppressed'. Their volumes have probably been a little bit down, so it’s just a bit of, 'Come on, we'll give you an early Christmas'".

He said it was "unusual for all of the banks to jump on the bandwagon" by offering such low mortgage rates, saying, "Normally, what happens is someone brings out a special, the other banks ignore it but they still match it when their customers ring up and ask for it".

"This is an unusual situation for them all to have jumped on."

Mr Patten warned, however, that the deal won't last for long.

"By the time Santa comes down the chimney, this rate will be gone. In fact, it will be gone in the next few weeks, so our encouragement for people is if you've bought a home and want to lock in a rate or if you’re coming off a fixed rate and you want this, get in now."

While there are "no fish hooks" attempting to lure people to the deal, he said "the cheapest isn't always the best".

"If you're on a single income, perhaps, you know, somebody [is] on maternity leave, don't just jump at the lowest rate. If you want a bit of security, you still should consider the two- and three-year rate are still very, very low as well."

He said many of the banks "offer cash contributions at the same time when you take out a new mortgage", but added, "In this case, they're still offering the cash back".

"I think the biggest thing you need to be aware of is you do need 20 per cent to be eligible for it, so that's one of the things – you know, if you've got any 10 per cent deposit, you're not going to be able to get these rates."

Mr Patten said you should check before breaking your current mortgage contract to take advantage of the low rate.

"Generally, what happens is the cost of you getting out is equivalent to what you're going to save. In some cases, it all depends on what the wholesale rate was when you took out your loan, so it's worth asking, but generally, you’ll find if it costs you $2000 to break it, you might save $200, so not always worth breaking."

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