Not necessarily. There are over 40 mortgage providers in New Zealand and none can claim to have the lowest floating and fixed rates all the time. The reality is they jostle for position and you will regularly see different lenders offering special rates.

 

Over the last 6 years we have seen interest rates range from as low as 5.35% to as high as 10.55%. That's a difference of 5.20%. How much control do you have on interest rates? Very little I suggest. Even your Bank is dictated to by the Reserve Bank and overseas markets.

 

With Interest Rates changing constantly (often daily) what is a good rate today could be a shocker tomorrow. When looking at interest rates you need to ask yourself:

 

• Will I get this rate on settlement (many Banks charge a fee to hold a rate)?
• Will this Bank be the cheapest in a couple of years when I refix?
• Will this Bank charge me a refix fee?
• By going with this Bank can I still get the right advice and structure to pay my mortgage off faster?

A personal observation is that people who chase the lowest interest rate rarely pay their mortgage off any faster.

Yes a good interest rate is important, but even if you could beat the market by say 0.10% over 25 years (a big ask) you would only save $3,027-00.

 

You then need to take into account the cost and inconvenience of changing lenders every couple of years.

 

8.50% v 8.40%
Rate	Amount	Term	Payment	Multiply	Annual Payment
8.50%	$     150,000	25 years	$1,207.84 pm	12	$       14,494.08
8.40%	$     150,000	25 years	$1,197.75 pm	12	$       14,373.00
			Difference pa		$            121.08
			Difference after 25 years		$         3,027.00

 

$3,027-00 is insignificant when you compare it to the simple changes in fortnightly payments that yielded a saving of $52,239.

 

Unless you're prepared to change lenders every couple of years I suggest choosing a lender that offers consistently good interest rates. More importantly you need a lender that can provide the loan structures you are looking for to pay your mortgage off sooner.

 

'Don't waste time on the small gains,

put your energy into the things that will bear the greatest results.'