First of all, I would like to confess, as this topic is one of the most common questions clients would like to ask me about.

Well, is there any positive connection with the interest rate and the property market price?

As the major concern for general customers of proposing the home loan, low interest rate will be a good trigger and timing for applying home loans and buy their first own homes, or new rental properties, with no doubt.

Let’s be back to the reason behind the scene. Why RBNZ would adjust the OCR is for encouraging the export business of dairy products, and the side effect would be encouraging the home loan applicants to compete in the property market, and the offered prices are increasing dramatically.

We cannot comment whether or not clients should purchase a property at the moment or when will be the best timing for purchasing the property. We can just focus on the mortgage perspectives for customers’ best interests. Here are some questions clients might be able to think about:

1. What is the intention for purchasing the property? If that’s for the long term investment (i.e. might keep the property for five to 10 years), capital gain will be the most important issue for customers, rather than the timing of getting in the market and make an offer. Of course, for short term investment, capital gain will be taxable.

1. What is the opportunity cost of purchasing your property? It will not just the interest rate, but also cost of buyer’s equity portion. Would you be able to contribute your equity to other investment purpose, such as bonds or shares? Even the ROI of your Kiwisavers (for the first home buyer) will also be put into your considerations as well.

1. How do customers consider about the change of exchange rate and the inflation rate, but not just the interest rate? Both the changes are inevitable in the long term, however, wisely choose your investment targets, and organise your loan structure, can help you reduce the risk and effect from the general environment, in case your salary/disposable income would have decreased from time to time.

Meanwhile, you need a professional mortgage adviser to follow up your request, your need, and customise your mortgage structure, to help you pay less, and pay faster. Mortgage is definitely not just about interest rate and cash back. Clients need professional and genuine adviser to help with the loan structure, and save you more opportunity cost.

Don’t let your efforts turn in vain after years. Talk to Emily, if you have a picture, and if you would like to have the proper financial advice from the trustworthy broker, please feel free to contact Emily.

Emily Hung/Registered Financial Advisor

iHOME Mortgage Broker Ltd

Mobile:02102493058

WeChat: EH02102493058

Mail to: emily.hung@ihomemortgage.co.nz

PO Box 21238, Rototuna, Hamilton, 3256