US Federal Reserve Keeps Interest Rates Unchanged

Yesterday, the US Federal Reserve announced they will keep the federal funds rate  unchanged for now.

Its expected that the other central banks (Reserve Bank of New Zealand, Reserve bank of Australia, and European Central Bank) will keep the interest rates on hold in their next OCR decision.

The good news is that mortgage interest rates will remain more or less the same – for now.

The bad news is that  inevitably interest rates will increase in the future. Interest rates have been at an historical low and is likely to trend upwards in the future. The average floating mortgage rate between 1990 and 2016 was 8.4%. This key information can be accessed here from Reserve Bank of New Zealand’s archive on mortgage rates.  See chart below.

 

floating-interest-rate

 

Economists worry that if interest rates increase and gets passed onto borrowers, a significant percentage of households may struggle to meet the increased mortgage payments. If and when this happens, will you be able to meet your mortgage repayments?

 

 

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