Hello, Matthew Dawe, mortgage broker and financial adviser here, and this is the short three-minute interest rate update. Now, obviously, a lot of chat about interest rates. You've got to be careful what you read because every article says rates are going up, okay? So let's just talk about this for a second.

So, interest rates, yes, let’s think about this, in the last 15 months, interest rates have dropped a lot, okay? So retail interest rates have come down. Why? Because the economy is soft, okay? Unemployment's been trickling up and rates have been too high for too long, basically. So the Reserve Bank was very careful about keeping interest rates low to encourage the economy to improve, right? So since then, obviously, we've had the Iran War, which has caused a spike in oil prices, right, which puts a lot of pressure on people.

I know that means inflation might rise in the short term because the cost of fuel, obviously, has gone up, but also the cost of transporting food, which means, you know, things like that, obviously, it feeds into every aspect of the economy. But what does it do? Ultimately, they say interest rates are in your mind. What I mean by that is, gauge how you're feeling and take that into account of the whole economy, right? Everyone's feeling pretty cautious.

Everyone's been beaten up over the last two or three years because of the high costs, as well as high interest rates and the economy being soft, right? So it's hard to see how interest rates can rise. Inflation could cause some short term pressure, but ultimately, it's going to cause downward pressure in the medium term. So what I mean by that, depends on how long the war goes for, whether it's concluded quickly, it might be when you're watching this, it is concluded, it might not be, but if it's continuing to go, yeah.

So what I mean by that is short term pressure, but long term, it's bad. Last time I checked, if you're not feeling confident, you're not going to spend, businesses are not going to hire people, you're not going to go and buy a car, you're not going to potentially buy a holiday. So what happens is, less consumer spending, which is the biggest part of the New Zealand economy, as a result, inflation down, the economy down, and unemployment goes up.

What does that mean? Rate cuts, lower interest rates, okay? So be careful when you're reading these articles that don't think about what's next. They're only talking about the oil price and then the pressure on inflation, right, in the short term. They have no idea what happens after that.

And it's all about how you're feeling. So yeah, and that's what happened in COVID, right? Interest rates went up, rates went too high, ultimately, long term, that slowed the economy and the rates came plummeting down. So I think that as a result of this, potentially, rates could be lower at some point.

Now, obviously, it's going to add some short term inflation pressure that could continue, especially if these things continue for a while. But I don't think there's any reason to panic. To give you an idea, the six month interest rate has dropped, okay, and one year is fixed, one year is around 4.49%, sort of 4.5% for a one year fix, a little bit higher there.

Two years is around that, so 4.8%. Three years, just above five. So yeah, between 4.8, there is a bit of a variance between different lenders because markets are confused about this as well. Nobody knows what interest rates are going to be doing in the future.

Obviously, you're going to need to take your own personal circumstances into account. But if you're scared because rates are rising, that means slower economic growth and rate cuts moving forward, right? It's actually not that hard to figure out. I have recorded a much more in-depth interest rate update that you can watch as part of this.

We're going to include that as well. So if you'd like more information, let me know. Also, I'm offering free strategy reviews and strategy sessions where we can talk about your situation and discuss next steps.

If you want to talk about breaking your interest rates, if you want to talk about other deals from other lenders that are available, cashbacks, all of that, happy to talk about that. It's been a pleasure talking to you. Look forward to talking.

Matthew Dawe
Mortgage Broker | Financial Adviser
Phone: 027 321 4287
Email: mortgages@matthewdawe.com‍
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