News for you on our rate change following today’s OCR announcement. We’ve dropped the interest rate on our floating home loan product TotalMoney, at a greater rate than the decrease to the OCR – from 6.34% to 5.99%
- TotalMoney floating mortgage rate drops from 6.34% to 5.99%
- Effective interest rate on TotalMoney could be just 4.49%
- Customer could take 10 years off mortgage.
With rates constantly moving, it may be time for mortgage holders to consider floating.
People might be surprised to learn that with us, a floating rate can end up lower than fixed, thanks to TotalMoney, which takes into consideration a customer’s savings with us.
For example, if a customer has a $200,000 mortgage and $50,000 in savings, we only calculate interest on $150,000. This means the effective interest rate is 4.49% per annum versus the carded rate of 5.99%. In this scenario, a 30-year loan could be shortened by 10 years, potentially saving the customer $50,000 over the life of the loan.
In this example, the TotalMoney effective floating rate is actually lower than today’s Classic fixed two-year rate of 4.99%. I think it’s the market’s best-kept secret.
The market is changing at pace, and this new rate, and the potential effective rate, will give people coming off fixed term or looking for new lending, the chance to consider that floating may now be the best option for them.
The new rate is effective Monday 27 July 2015 for new customers, and 11 August 2015 for existing customers.
There’s more of an overview of offsetting in one of Tash’s blogs here.