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不说房产, 今天出炉的一篇----
Now we've heard from new Reserve Bank Governor Graeme Wheeler for the first time and we've seen the housing market burst back into life, it's worth revisiting the eternal question of whether to stay floating or to fix your mortgage.
The short story is that economists and the financial markets are divided on whether the Reserve Bank will cut or hold the Official Cash Rate over the next year or two. Overall, inflationary pressures and the economy are subdued, but house prices are surging again and the new Reserve Bank Governor seems to be taking an orthodox approach to policy and interest rates, which means he is less likely to cut.
That means my views on Fixed vs Floating are changing. While Reserve Bank Governor Alan Bollard was in charge of setting the OCR and the housing market was lukewarm, I thought there was a greater chance of a cut in the OCR. But I've seen enough now of his successor Graeme Wheeler since he started at the end of September to believe there's a greater chance the OCR will be flat or even be hiked in the next couple of years.
The Reserve Bank has a big dilemma at the moment. The economy is subdued and inflation is below the Reserve Bank's 1-3% target range. All other things being equal, there'd be a good case for the Reserve Bank to cut the OCR, which should in turn drag floating rates lower and make floating more attractive than fixing. But house prices are taking off again and any OCR cut risks pouring yet more petrol on the fire of record low interest rates under house prices, particularly in Auckland and Christchurch.
One way for the Reserve Bank to get around this dilemma would be to use other tools to try to control the housing market, incluing limits on Loan to Value Ratios (LVRs). Other central banks and bank regulators in Israel, Canada, Hong Kong and Singapore have used such LVR limits, but Wheeler said early in November he would not use a LVR limit yet, even if he had it. See the full article and video here.
That means Wheeler is more likely to use the blunt instrument of the OCR to try to keep inflation around the 2% mark he has agreed to target in his own Policy Targets Agreement. If he worries about the housing market getting too hot then the one way (in his view) to knock it on the head is to hike the OCR. That's why I'm tending towards floating half and fixing half of my mortgage in coming months, rather than floating it all.
Everyone is different though, so it's worth running through the pros and cons of fixing vs floating and look in depth at the various factors at play. It's also worth spending some time on it. As I'll show lower down, it's a decision that could save (or cost) you thousands of dollars over the next couple of years. Here's our Fixed vs Floating calculator to help.
Also, there are many different views, and I've included those views of other economists below.
What the economy is doing and what the RBNZ is saying
Firstly, let's look at what the 'ref' at the Reserve Bank has said recently and what the latest economic and financial signals are saying.
The Reserve Bank's chart below from its September 13 Monetary Policy Statement of its forecast track for the 90 day bill rate, which is typically around 30 basis points above the Official Cash Rate (OCR), tells the story.
The blue line shown is its September forecast with the OCR peaking at around 3%. The red line shown is its June forecast. These forecasts have been dropping for at least a year.
Wheeler said in the Reserve Bank's October 25 decision that New Zealand's economic outlook remained modest and the global situation was fragile. He said he was watching inflation closely and it was expected to head back to around 2% so he saw no need to change the OCR from 2.5%.
So the Reserve Bank is forecasting a rise (the blue line), but it's very slow and not much at all. If the Reserve Bank's forecast now actually turns out to be fact, then floating mortgage customers would see their advertised floating rates of around 5.7% rise very slowly to a peak of around 6.2% by the end of 2014. Although it's worth remembering that those customers with plenty of equity and good repayment records can push their banks for better deals at the moment of around 5% to 5.2%. Those in competitive situations would see their floating rates rise to around 5.7% by the end of 2014 in this scenario. Currently (Novembe 20) 18 month-2 year rates are around 5%, which would mean you'd pay more for the first 6-12 months or so and then less in the second 12 months.
Fixed rates tend to be more closely linked to wholesale 'swaps' rates than the OCR. Swaps rates have broadly fallen this year on increasing fears about a global slowdown and a slow rebuild in Christchurch.
There is a way to test the various scenarios and work out which option is cheaper (although cheapness is not the only factor worth thinking about for many people).
There is a calculator
We have a calculator here that allows you to test which rate is cheaper, depending on three different interest rate scenarios. Click here to go to the calculator.
There are three different rate scenarios. A is the high one with an OCR peak of almost 3%, B is the medium one, which is in line market expectations for a small cut and then a rebound to 2.75%, and C is the low one, which implies some cuts to 2% and then a rebound to 2.5% by early 2014.
Try it out to see which option is cheaper for you, depending on your rates view.
A simple money calculation isn't everything though. Some people put a high value on knowing exactly what their mortgage payments are going to be for the next two years because, perhaps, they have a fixed income or are very nervous about a sharp rise in rates. They may see paying slightly more for a fixed mortgage as a bit like an insurance payment.
Others may want to stay floating because they really believe interest rates will be cut again or not rise and because they don't want to be stuck fixing and have to pay an exit fee if rates do fall. The most recent memories for some people are having to break their mortgages and pay big break fees (or finding it unaffordable to do so) during 2009 and 2010. Others have longer memories of being stung with big increases in floating mortgage rates as the OCR was hiked from 5% to 8.25% between early 2004 and mid 2007. Really old people remember the 20% plus rates of the mid 1980s. I'm not that old. ;)
Everyone has different appetites for those sorts of risks about paying more or missing out on paying less, and different views about where interest rates will go. Those are the main things to consider when fixing or floating.
More than 50% of New Zealand's mortgage lending is now on floating rates, which is just below a record high and a complete turn-around from before 2008. Although there has been a slight move back to fixing in recent months. See Gareth Vaughan's article here. The decision for many now is when to fix. |
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发表于 2012-11-22 10:01:53
