2016 should be a great year for home owners with mortgages; interest rates will likely be as low as they have ever been and both economists and the reserve bank predict rates not moving until at least 2017.

Competition between the banks should mean fixed rates will get to around 4%. If you consider 7% as the average interest rate for New Zealanders there are some significant savings there.

On a $350,000 30 year mortgage minimum repayments will be $1671 a month at 4%. At an average interest rate of 7% monthly repayments would be $2328 a month.

So interest savings of $657 a month. If you took that $657 in interest savings and used that as extra monthly repayments for only 3 years you would save $120,000 in interest and pay off your loan 5 years earlier (compared to a 7% mortgage).

So you can see there is serious money to be made if you make the most of the mortgage opportunities 2016 presents. The additional benefit of making these extra repayments is if rates do return to 7% you will be able to comfortably manage them as you have already been making the repayments based on those levels.

The worst thing you could do in 2016 is take the current economic conditions for granted. It would be a missed financial opportunity plus a potential rude awakening when rates do move.

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.