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Speaker 1: So it looks like kiwis with mortgages are hedging their

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Speaker 1: bets for interest rates to keep falling. In the month

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Speaker 1: of October alone are whopping. Ninety percent of mortgage holders

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Speaker 1: were on very short term rates, so we're talking about

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Speaker 1: either one year or six months or even floating and

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Speaker 1: basically doing that waiting for the better rates to kick

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Speaker 1: him before they actually start fixing. From squirrel mortgages and investments.

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Speaker 1: We've got David Cunningham with US Morning.

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Speaker 2: David, good morning here.

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Speaker 1: That ninety percent seems really high. How much high is

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Speaker 1: that than normal?

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Speaker 2: That's pretty much the hearst that I've ever seen it

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Speaker 2: in thirty years in banking and finance. So yeah, it's

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Speaker 2: an extraordinary situation.

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Speaker 1: Is it a smart move? I mean, obviously floating is expensive,

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Speaker 1: so right, if you're sitting there on the floating waiting

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Speaker 1: for it to come down and you're actually ending up

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Speaker 1: saving money, well.

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Speaker 2: You know, about normally about ten percent of all home

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Speaker 2: lending in New Zealand's floating rate just by comparison, that's

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Speaker 2: bloody unusual. In Australia, it's like ninety percent, so a

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Speaker 2: tiny proportion, and that's simply because banks take big margins

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Speaker 2: on floating like almost double the fixed rates. So that's

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Speaker 2: the first oligopolistic problem. But putting that aside should be

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Speaker 2: on a short term fix straight Generally, you know, when

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Speaker 2: you're near the top of the interest rate cycle and

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Speaker 2: at the bottom of the interest rate cycle, when you

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Speaker 2: know interest rates are two or three, it's tempting to

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Speaker 2: take the very best rate, which might be one year,

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Speaker 2: but you know, like the five year rate was two

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Speaker 2: ninety nine. Funnily enough, I've got a two ninety nine

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Speaker 2: percent rate rolling off in the next twelve months, so

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Speaker 2: I'm part of that massive group. So my rate's going

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Speaker 2: to go up.

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Speaker 1: Are you feeling about it, David? How are you feeling?

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Speaker 2: I'm pretty satisfied. Good run. But you know, there are

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Speaker 2: still people having mortgage rate rises. But for almost everyone,

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Speaker 2: you know, the average interest rate is going to fall

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Speaker 2: from about six and a half percent what we're paying

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Speaker 2: to you know, suber five percent over the next twelve

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Speaker 2: to eighteen months. So it's going to have a huge

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Speaker 2: positive impact on the economy. But it will take you know,

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Speaker 2: it will be gradual. You know, it will take a

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Speaker 2: little bit of time, in other words, a year. So

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Speaker 2: when I've got a good year and twenty five ahead

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Speaker 2: because of exactly this, and so we have a fairly

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Speaker 2: rapid impact that what Adriana is doing at the moment.

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Speaker 1: If somebody is sitting there going, okay, I'm just going

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Speaker 1: to hold on tap because I can see a whole

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Speaker 1: bring big cuts coming at the start of the year,

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Speaker 1: going to hold on tight a little bit, wait for

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Speaker 1: them to come down. Would you be saying floating or

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Speaker 1: six months? Six months smarter option?

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Speaker 2: Well, this is the ridiculous of the situation. We're floating

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Speaker 2: great margins and much higher. You know, it depends on

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Speaker 2: how long it is between Reserve Bank announcements, and right

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Speaker 2: now we've got almost three months, so you'd be mad

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Speaker 2: to stay on floating at you know, seven and a

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Speaker 2: half to eight percent when you can get a six

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Speaker 2: month rate, you know, wrap about six percent. So at

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Speaker 2: the moment, because of the timing of this big gap

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Speaker 2: between the next docer cut, which is almost certainly becoming

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Speaker 2: fifty fifty odd basis points most likely, so at the moment,

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Speaker 2: six months is the most smartest term for most people.

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Speaker 2: But each circumstance will obviously be different, so you know,

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Speaker 2: consult your advisor and all that.

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Speaker 1: Yeah, what are you seeing out there, David? Are you

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Speaker 1: staying to feel a little bit upbeat about how the

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Speaker 1: property market's starting to pick up?

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Speaker 2: Oh? Look, I think it's going to be a gradual,

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Speaker 2: gradual recovery because you know, I mean there's a lot

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Speaker 2: of stock on the market. There are a lot of

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Speaker 2: people that have gone through a lot of pain that

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Speaker 2: probably would like to get out, and so you know,

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Speaker 2: it's the supply and demand ultimately a and there's a

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Speaker 2: lot of supply and the demands is you know, it

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Speaker 2: just take a while to go up. You know, first

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Speaker 2: time bars are always there, so you know, I always

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Speaker 2: I just reckon. It's a brilliant time for first time

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Speaker 2: buyers if you can, if you have the deposit or

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Speaker 2: your key, saber, it's a brilliant time because property prices

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Speaker 2: are sort of probably round about the bottom and that's

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Speaker 2: part of the cycle, and the interest rate's going to

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Speaker 2: go down. You know, it's almost like nirvana if you can.

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Speaker 1: Afford it fair enough. David, thank you really appreciate it.

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Speaker 1: Have you have a good day that David Cunningham, the

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Speaker 1: Chief Squirrel at Squirrel Mortgages and Investments. For more from

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Speaker 1: the Mic, asking Breakfast.

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Speaker 2: Listen live to news talks it'd be from six am weekdays,

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Speaker 2: or follow the podcast on iHeartRadio