STOP PRESS:  As I am sure you will have heard the Reserve Bank has just dropped the OCR rate by 0.75% to a figure of 0.25%.  We now await to see how banks will respond.  We assume this will occur during the week.

There has also been some unexpected decreases to the 3-5-year fixed rates. 

At the moment I am being asked a number of times each day what the effect will be of the coronavirus on banks, interest rates, my mortgage, the housing market and so on.

To help answer some of these questions, here is what I see from the industry and my clients.

First of all, real estate agents are nervous. Buying and selling property is a confidence game, and when there is a lack of confidence people don't buy houses. People generally don't make major changes by choice in uncertain times.

My clients:

• When their fixed rates are due to roll off they are asking us to hold off for as long as possible before re-fixing to see if rates will drop.
• Some clients are choosing to settle their house with floating loans and will fix in a couple of months, assuming rates will drop.
• Some are getting top ups now, in case their circumstances change.
• Some are looking forward to two weeks of voluntary isolation!

Some general thoughts:

• It seems that rates won't be going up in the near future (in saying this, a major bank has just dropped their 3-5-year fixed rate specials this morning, but increased their 1-year rate by 0.06%—go figure!).
• Given the economic predictions of a drop in OCR on 25 March, if you can wait a bit to re-fix, that would seem to be a sensible strategy.
• Make the most of the low rates to pay your mortgage down (if you trust yourself with money while paying the mortgage down, make sure you can re-access these funds if you think you may need them).

Brendon Ojala 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.