OCR Cut & Coronavirus — What does this mean for borrowers?

Houses13

Posted 7 months ago by Pope & Co. Mortgages

Almost every day the current situation is getting more and more unusual as the country is in a near 'lock down' mode. On Monday the OCR was cut by the Reserve Bank by .75% and almost immediately all the major banks dropped their floating rates accordingly. It remains to be seen if the fixed rates will also drop. 

Obviously it's annoying if you recently fixed a rate and then the rates drop. This is just a normal part of your mortgage life, they could easily have gone up. There are more important things to worry about in life so don't let it bug you. Yes, technically you could try and drop down to a lower rate, but the fee to do so would likely outweigh the benefits.
 
I am worried about my job and meeting mortgage repayments, what shall I do? 
If you are concerned about your ability to meet repayments, you could apply online on the bank's website for a small top up to have as an emergency buffer if you don't already have one. Alternatively, if it did become a problem, you could visit the branch and seek a 3-month mortgage holiday or short term interest-only payments. But don't do anything hasty, the key is not to panic and just see what happens over the next week or two. 

Will the value of my house drop?
This is difficult to say. One would expect that things will get under control in the next few weeks and things will return to some sort of normality. Some people will no doubt delay selling and buying due to job security, so activity could very well slow down for a while.

I am trying to buy a house, should I carry on looking?
Absolutely, there may even be a few less buyers to compete with. If you feel secure in your job then its still wise to keep looking. Just be patient as turnaround times are still slow and likely that will continue. 

What else can I do financially?
Just be careful around expenses and what you commit to financially. 

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