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Jo and Jamie

Hi Michelle

We just wanted to follow up and say thank you very much for all your help earlier in the year. We are very happy with how things are going at Westpac. 

You and your team have done an absolutely amazing job. At first we weren’t sure if we would be accepted to refinance because of all the unsecured debt that we had but you did all the hard work to ensure that it all went through without lots of credit checks. Now things are a lot better for us financially and we can start thinking about planning for the future.

Thanks very much

– Jo and Jamie

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What is the Official Cash Rate?

The Official Cash Rate, introduced in March 1999, is the interest rate set by the Reserve Bank to meet its inflation target, (currently 1 to 3 percent on average over the medium term), with a focus on keeping future average inflation near the 2 percent target mid-point.

The OCR is reviewed eight times a year by the central bank. Monetary Policy Statements are issued with the OCR on four of those occasions but unscheduled adjustments to the OCR may occur at other times in response to unexpected or sudden developments, but to date this has occurred only once, following the 9/11 attacks in 2001.

What does the OCR do?

The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a way of influencing the level of economic activity and inflation.

By international standards, an OCR is a fairly conventional tool and in the past, the Reserve Bank used a variety of tools to influence inflation, including influencing the supply of money and signalling desired monetary conditions to the financial markets. These mechanisms were more indirect and difficult to understand.

How does the OCR work?

Reserve Bank settlement accounts, held by most registered banks, are used to settle obligations with each other at the end of the day.

For example, money from the many hundreds of thousands of Eftpos and cheque transactions made every day is paid by your bank to the bank of the recipient.

The bank pays interest on settlement account balances, and charges interest on overnight borrowing, at rates related to the OCR. These rates are reviewed from time to time, as is the OCR. The most important part of the system is the fact that the Reserve Bank sets no limit on the amount of cash it will borrow or lend at rates related to the OCR.

Visit the Reserve Bank website for more detail.

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Hunt for the best Credit card deal

Credit card debt is on the rise. If you want to get rid of your credit card debt faster – then make sure you are getting the best deal.

Changing from one bank to another could save you thousands of dollars, as the major banks offer balance transfer deals that mean you pay a low interest rate on the transferred amount for a fixed term. For example, Westpac offers a 1 per cent balance transfer rate for 12 months. If you have high debt this interest saving can really add up.

Consider low-interest cards. Although the fees are twice as much, the lower interest rate can still mean you save money if you have to pay the debt off over a long period of time.

Of course, transferring to a bank with a low transfer rate offer won’t benefit as much if you don’t actually pay the debt off!

Source: NZ Herald

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Mortgage rules mean fewer homes selling at auction

The number of homes selling at auction has fallen from 80 percent in September to 48 percent. 

Fewer first home buyers contributed to this according to Barfoot and Thompson’s Peter Thompson.  There is also more choice for buyers, and agents are reporting that auctions are now not necessarily the best way to sell a property at the moment.

Source: NZ Herald

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Too soon to see effect of home loan restrictions

The Reserve Bank says it’s too early to decide whether the restrictions on low equity home loans has had the desired effect.

Real Estate institute figures show house sale prices continue to rise although indications are that sales volumes have slowed. However, volumes change more quickly than prices with volumes lower than expected for this time of year.

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Home Loan restrictions cool auction action

Auckland’s auction ‘fever’ is apparently about to cool now the Reserve Banks home loan restrictions have come into force.

When buying at an auction, the sale is unconditional.  But this is more difficult, particularly for first home buyers, without having a pre-approved loan.  But following the new restrictions, banks are moving away from pre-approved loans, which means auctions are out for many first home buyers reports TVNZ News.

The end result will be less auctions, predicts experts.

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