SUPERBANK NEWS RELEASE
CONFUSION AND COMMITMENT WORRIES ABOUND IN MORTGAGE MARKET
New research shows people making loan decisions that conflict with their beliefs on future interest rate changes
WELLINGTON, 15 October - New research, commissioned by Superbank, highlights the human impact of rising interest rates
and falling house prices, confusion exists about whether to sign up to a variable or fixed rate mortgage - and for how
long. The research is timely given the recent announcement by the Real Estate Institute of New Zealand (REINZ) that the
median house price in New Zealand fell from $249,000 to $247,000 in August and the uncertainty around future rate
increases.
The research shows that expectations and feelings on interest rates often run in conflicting directions. For example, 40
per cent of people who think rates will drop in the future still plan to fix their mortgage. Conversely, 15 per cent who
expect rising rates are also some of the most concerned about paying too much if they fix and interest rates
subsequently go down.
"We believe that twelve months ago these concerns would not have been as marked - this is the human face of a rising
interest rate environment for home-owners," says James Munro, chief operating officer of Superbank. "The number of
people making loan decisions against their better judgement really surprised me. However, with interest rates so high,
people are really agonising about the decision to fix or float their mortgage - nobody wants hindsight to prove them
wrong."
This finding came from nationwide telephone research by New River that polled 482 people over the age of 18 in early
October. Other interesting findings included:
-· While 38.2 per cent of people currently have a mortgage, 3.3 per cent are still planning to get a mortgage in the
next six months despite the uncertainty ·
- 48 per cent expect interest rates to keep rising over the next year, while 38.5 per cent believe that the rate will
rise a little further and then drop. Nobody believes rates will fall
-· The threat of a big rate rise looms largest as the main concern for 40 per cent
·- For 15.5 per cent, being stuck on a fixed term while rates fall worries them the most
"Like many others buying our first house was a big step, but one we felt well advised in," says Sarah Futter, a recent
Superbank customer. "After Superbank recommended a fixed loan with small floating component, we still sought advice from
parents, friends, newspapers, anywhere - before we felt confident of signing on the dotted line. With the unpredictable
way the market is today, I would recommend that everyone get as much information as they can before making a decision."
About Superbank:
Superbank is the trading name of St.George Bank New Zealand Limited. Superbank is a joint venture between Foodstuffs New
Zealand and St.George Bank Ltd of Australia. St.George Bank Australia is a listed company in Australia and has assets of
over AUD $55billion. The Foodstuffs group of companies (New World, Pak 'N Save, Write Price and 4 Square) is the 4th
largest trading organisation in New Zealand. People can open an account very simply: by calling 0508 226 546 or by
picking up an application form from a supermarket and posting it in.
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