Last weeks election result was a windfall for borrowers.

The incumbent National government being able to govern alone or, at worst, with parties just grateful to still be there, is a result New Zealand mortgage holders could only dream of.

Any result that had a cobbled together coalition of the Left would have undoubtedly lead to out of control spending to try and placate all of the various political agendas.

The result would have been to stoke the fires of inflation and push interest rates higher and faster.

All the bluster from many on the left that they would step in and control interest rates by whatever means was just that, bluster.

Whatever your political persuasion, there is no doubt that the current government is a conservative manager of the country’s finances and without any minor players to have to assuage it should continue to run a steady and some would say boring ship.

The result is we can look to standard economic fundamentals to try and predict the future direction of interest rates.

It is already accepted by most that we won’t be seeing any more OCR increases this year and with a continuing strong dollar, weakening commodity prices and no sign of any significant interest rate increases from major trading partners I believe we could be waiting a little while into the New Year before we do.

Current Mortgage Rates

The best rates on offer at present are:

Please note these are carded rates and we can normally negotiate better for clients.

Floating 5.90%
6 Months 5.80%
12 Months 5.85%
24 Months 5.99%
36 Months 6.19%
48 Months 6.75%
60 Months 6.79%

These rates are indicative only and should not be relied on in any transaction

This mornings announcement that the European Central Bank has lowered interest rates in Europe to an all time low of 0.25% highlights the growing issues facing the New Zealand Reserve Bank as it ponders its future interest rate strategy.

Not only do they have some domestic headwinds to deal with but international issues are also starting to pose a distinct threat to global growth and security.

In New Zealand we are seeing a massive slow down in dairy prices and a potential Fonterra milk price starting with a 5.  That and other issues mean we are going to see lower growth than has been factored into interest rates so far.

Internationally though we still see very modest growth in Europe as evidenced by this mornings rate drop.  Australia has so far maintained its rates but not lifted them as its economy shows nothing more than a faint heart beat and in the US the expected cessation of their money printing is happening much slower than expected.

Throw in the possibility of a major international conflict either in Ukraine or Syria and a potential slow down in the global power house that is China and the landscape is very rocky indeed.

It has already been accepted that the OCR will remain as is until early 2015 but there is now the very real possibility that could be longer.

A short term interest rate strategy continues to make sense.

Of course that could all change depending on the events of September 20!!