The Cost of Money
It’s been said before, and the soothsayers have used jargon to get the story across, but recent [2009] changes to the Reserve Bank Act have commended that all NZ banks must place larger amounts of their total funds in reserve, with the Reserve Bank. The result has meant that there isn’t enough money in circulation in NZ to meet loan needs …mortgages, farm and commercial loans etc, so the banks have to go off shore to top up supplies.
Sadly for us, the cost of getting access to this off shore money is high, so our mortgage interest rates will trend up and probably faster than other economies.
So, if you are going to purchase, talk with your advisor, and we’d advise that should in most cases be the bank, about fixing interest for a time just so you can budget those first few years without surprises of increases in floating rates.
Listen to the experts though…they do know best
Filed under: REAL ESTATE | Tagged: Real Estate