PHOTO: Global recession
With experts saying global recession is coming sooner than people think, New Zealand banks are bracing themselves for its impact on the property market.
According to Stuff.co.nz, even a moderate slide in house price would prompt banks to recalculate the mortgage interest rates of some homeowners the next time they refixed their loans.
Banks charge lower “special” interest rates if a borrower has more than 20% equity in their home but a slide in prices would make any homeowner slip below that level – facing higher mortgage rates.
“They would say you don’t qualify for the special rates,” Karen Tatterson, mortgage broker at Loan Market, told Stuff.co.nz.
ASB’s current two-year fixed rate for those who have more than 20% equity in their homes was 3.69% compared to 4.19% for those with less than 20% equity.
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