Interest Tips
16 October 2015
I spoke at the Waikato Property Investors Association meeting on Wednesday night.
There were three things that the members seemed very interested in.
1. Is it smart to have $300,000 floating?
If you are going to float, you may as well fix for six months instead because six months is over so quickly and you can save 1% - 1.5% in interest. Current floating rates are 5.89% and 6 months 4.85%. (www.interest.co.nz)
$300,000 @ 5.89% = $17,670 per year
$300,000 @ 4.85% = $14,550 per year Saves $3,120 per year
$300,000 @ 4.35% = $13,050 per year Saves $4,500 per year
2. Interest rates in the next three or four years.
Out of a show of hands of approximately 120 Waikato property investors at the meeting, 75% thought interest rates would go back up in three or four years’ time.
If you are thinking of breaking or fixing short term, I would start to anticipate a rise in three or four years’ time. But you will need to make sure your strategy is working the best for you!
3. My personal approach is to:
-
- Float $20k to $50k
- Fix 1/3rd 5 years, close to 5%
- Fix 1/3rd for 2 or 3 years. 4.5%?
- Fix 1/3rd for short term, maybe 1 year 4.35%
- Avg 4.62%
Kind regards
Ross Barnett
