Why are floating mortgage rates so expensive?
A floating rate mortgage gives you the flexibility to repay principal at any time. But is it worth it?
Floating rates at the banks range from 3.40 per cent at KiwiBank, to 4.49 per cent at Westpac. So compared with one-year rates of 2.29 per cent at most banks, floating rate borrowers pay an extra 110 to 220 percentage points in interest. On a $500,000 mortgage that’s an extra $100-200 a week in interest.
In this article, Sam Stubbs looks at the reason floating mortgage rates are so high in New Zealand and explains why the current lack of regulation, and proper competition, mean they are unlikely to get lower.
Full article on Stuff.