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When will home loan interest rates go down?

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If you’re reading this article, you’re most likely worried about the current interest rates and are wondering when you’re going to get some relief from your mortgage. In this article, we’ll give you three tips on how to figure out whether the interest rates are going to go up or down, as well as an amazing strategy so you don’t have to worry about interest rates at all. 

Watch instead: When will home loan interest rates go down?

Tip 01: Look at what the Reserve Bank is doing

If the Reserve Bank is looking at inflation, learn about how they adjust the economy with interest rates so then you can get an idea of what’s happening to your mortgage interest rate. Why? Because banks actually use the Reserve Bank’s interest rates to decide what their, (the banks), interest rates are going to be. If the Reserve Bank sees that inflation is getting too high, they will try to discourage New Zealanders from putting more money into the economy, i.e. spending, by increasing the interest rates.

Tip 02: Look at what the banks are doing

Banks are trying to make money. They care about the bottom line and making their shareholders money, not the little guy, which is you. The margin of their profit is in the interest rate – if interest rates for what the bank has to pay increase, they need to increase their interest rates they pass onto customers so they can make the profits they’re aiming to make.

So, think like the bank. If the bank is encouraging spending, they are going to lower their interest rates. This usually happens when the economy needs to recover from a slump. If the economy is not well and they’re wanting to discourage spending, the banks are going to increase their interest rates and encourage people to save instead. 

A bar graph drawing of interest rates increasing

Tip 03: Listen to the economists.

Economists such as Dr Eric Crampton and Tony Alexander are usually asked to give their two cents on One News, Radio New Zealand, The Herald etc. regarding the current economic situation New Zealand finds itself in. A caveat with Economists, particularly Economists who are not independent, is that they are usually paid by someone to give the advice and to analyse the economy based on a certain viewpoint; so be wary of what that viewpoint is. As with anything predictive, economic forecasting can, quite often, be wrong, so be sure to take all advice with a pinch of salt.

Never worry about interest rates again: Our Strategy

Interest rate control will always be in the hands of the banks and the Reserve Bank, not yours. Our strategy aims to put the control back into your hands with your own mortgage and is called a mortgage debt reduction plan. This plan allows you to use the bank’s products, the structure of your mortgage and the advice from a mortgage debt reduction specialist to create a plan to pay off your mortgage faster than you thought was ever possible.

If you would like a review of your mortgage, click the link and book a 15-minute chat so we can review your mortgage and see how we can help you save some money and not worry about interest rates and when they’re going up or down.

If you’d like a review of your situation and to get your own mortgage debt reduction plan underway, please book a free 15-min chat. 

Keep in mind this article is providing general information and not individual financial advice.