Fixed verses floating: What to do as interest rates hit new lows


Right now, there are some tantalizing fixed interest rates out there. But are they worth jumping ship for?


I hate to be the "I told you so" guy ... Actually, scratch that. I LOVE being that guy.


I embrace these moments at every opportunity. They are few and far between so you're getting most of an article dedicated to an “I told you so” moment this month.


I've been saying for the past four or five weeks that there will soon be a bank that offers a <4% one-year rate. It would most likely be SBS or BNZ and the reason they would do it is to grab the headlines. And lo, today it was released ... 3.99% for one year by SBS, which is a shame because the other major banks take pricing by BNZ a lot more seriously.


3.99% is a nice rate. When was the last time you saw a “3” in front of your mortgage rate? Never, that's when. Unless you're from another country.


So the inevitable question is this: Should you refinance in order to take advantage of this historic occasion?


Here are a few things to consider:

·         There are no cash contributions with these sub-4% rates;

·         This, in turn, means that you're covering the conveyancing fees;

·         And you’ll be covering any break fees (some of which can be eye-watering).


Similar to our Break Fees Calculator, Velocity has a calculator that will tell you if you're going to come out on top by moving to SBS. This calculator considers the points above and will let you know if a change will be worth it in the long run.


We have an agency with SBS and we find them a lovely bank but they do come with a catch. They are quite conservative with their lending so you may have trouble refinancing if you own a non-standard property. Feel free to talk to us if you have any questions though and it doesn’t hurt to punch the numbers with our calculator.


Rupert Gough is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.