Tip:
Highlight text to annotate it
X
Hello, Well, interest rates have risen slightly,
which was widely anticipated. In fact I saw one economist quoted as saying
that the rise would have to be a contender for the best-signalled monetary policy move
in New Zealand's history! That view's reinforced by reports that there've
been more people moving from floating to fixed mortgages recently.
Of course, for borrowers, a rise in interest rates makes a loan a bit more expensive, but
there a few points worth making here. One is that for the past few years we've had
the lowest interest rates in 50 years. When we came in to government in late 2008,
the average floating mortgage rate was almost 11%.
On an average home loan of about $200,000, it was taking an extra $200 a week to service
a mortgage on the floating rate then, compared with lately.
Another point to make is that rising rates are a by-product of a growing economy.
We have growth of more than 3% at the moment, business confidence is at a 20-year high,
and, importantly for families, job growth is going up, unemployment is coming down and
wages are rising faster than inflation. Our economy is doing much better than many
similar countries and the interest rate rise is the Reserve Bank's way of keeping things
in check. Another point is that while people who have
loans might wince at rate rises, some New Zealanders will welcome a higher interest
rate so their savings grow a wee bit faster. That includes people saving for their first
home, and many retired people. Whichever side you're on, we're not expecting
an unmanageable take-off in rate rises. Rather, the period of crisis is receding,
and we're on a gradual return towards normal.