Mortgage Holidays and Interest Rates

In March the RBNZ and New Zealand Bankers Association announced a six-month deferral scheme for borrowers affected by Covid-19. While unlikely fresh news for homeowners, the impact of taking up this offer may come as a surprise.

Data to June 2020, revealed that nearly 60,000 NZ borrowers had agreed to defer payments on $20.2 billion home loans, personal lending, credit card or overdraft debt. A further 79,166 customers opted into reduced principal and interest or interest-only repayments.

It is important to remember, that while these “holiday” arrangements are a welcome relief for many borrowers, they should only be used through necessity. Experts remind borrowers that interest continues to accrue on your home loan balance. Ultimately, borrowers may need to increase mortgage repayments or take longer to pay off household debt once the “holiday” ends.

On the flip side, those looking to enter the property market can benefit from all time low interest rates. Now could be a good time to talk to your mortgage advisor and see what low rates you can benefit from.

For sellers, despite talk of a fall in house prices owing to the impact of Covid-19, the property market has maintained robust price increases, as discussed in our latest Rotorua Property Report.

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