Revealed: Mortgage broker says paying off debt faster is the way to go

Global volatility will no doubt factor into the Reserve Bank's monetary policy statement on Wednesday.

The bank's expected to slash the official cash rate (OCR) to a new record low of 1.25 percent in a bid to stimulate economic growth.

With New Zealand home loan rates already at record lows - banks are telling customers it's a good time to own that home. 

And paying that home off could get easier as the Reserve Bank's expected to cut the official cash rate by 25 basis points. 

And if the bank signals further cuts - mortgage rates could drop even lower than 3.79 percent.

"There's every chance that we could see the rates get down into the very low threes or sub-three percent, even," mortgage broker Bruce Patten told Newshub. 

Patten said most homeowners will respond by repaying the minimum, and spending that spare cash elsewhere.

But Patten's advice is to do the opposite - pay off your debt faster.

It's a great chance to be really smashing your mortgage while rates are low," Patten said. "Because we can't guarantee it'll always be this way."

Some economists worry that  Reserve Bank is becoming less effective at stimulating New Zealand's slowing economy, as the OCR drops lower and lower.

"There's a bit of a vicious cycle there as you can see - businesses unhappy, consumers unhappy then not going to see the growth coming through," Infometrics chief forecaster Gareth Kiernan told The Am Show.

Mortgage broker Bruce Patten.
Mortgage broker Bruce Patten. Photo credit: Newshub.

However - there was some growth in the labour market to stimulate confidence on Tuesday; unemployment unexpectedly fell to an 11-year-low of 3.9 percent.