With the news that the Reserve Bank of New Zealand was keeping the official cash rate steady at 3.5 per cent in December, many people would have been thrilled with the ongoing stability. Those with floating interest rates on their home loans were likely to be afforded a bit more steadiness, and it's nice to head into the new year with everything remaining as-is.
However, the Reserve Bank of New Zealand noted in a December 11 release that there was likely to be some increase to the cash rate later in 2015. But this is no reason to panic! Rates flow up and down each year – it is simply the way it is. What is important is getting the right investment advice, especially if you're looking ahead at buying property. But since the cash rate might be rising later in 2015, let's take a look at what some people are predicting will happen.
Who says the rate will rise?
Giving his forecasts for 2015 on interest.co.nz on December 15, Roger Kerr stated his belief that interest rates here would rise from 3.5 per cent to 4 per cent, which would help to bolster the strength of the New Zealand dollar globally. While this is not a direct link to home loans or property investment, it shows that there are voices out there who are forecasting future rate hikes.
This was also echoed by Bernard Hickey, who wrote in the New Zealand Herald about the potential for rate rises on December 21. If it was to occur alongside a cut to Australia's cash rate, then perhaps the NZ dollar would even be competing with the Australian dollar for parity!
If interest rates do rise as these two predict, then it will be important to adjust your finances accordingly. For many of you, this will mean fixing home loan payments on your investment property – something we are glad to help you out with.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert