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New Zealand's 
Current Interest Rates:

Floating Housing Base Rate 9.55%
Everyday Housing Base Rate 9.25%
Fixed 5-year 7.65%
Capped:  8.85%

The laws about refinancing and loans in New Zealand differ from those in Australia and other countries near us.  For instance, when repaying student loans a 10% tax surcharge is levied on income once the student graduates and is in employment.  High rates of student loans has pushed many college graduates into leaving New Zealand, looking for higher-paying jobs.

There are other reasons to refinance, as well.  You may want to lower the monthly income mortgage payment, or perhaps you want to combine the credit card debts into a lower interest loan and change some of the equity at home to cash to be able to use it for some other purpose. Whatever it may be, better start thinking about the time limit you will be staying in this particular place. Those planning to move soon and are able to save only about $50 a month by refinancing, then it�s not worth it. Well start calculating the months you plan to stay by the savings per month, then compare this total to the fees you are paying as refinance. The fees should always stay less than the savings of refinancing.    

For those planning to stay in their homes for a minimum period of five years or less and have a fixed loan rate have a better chance of saving money with a five or seven year fixed loan rate. You see, these loans tend to have a lower interest rate than those thirty year fixed rate loans. So, if you plan on staying for a short period, opt to refinance for the fixed rate loan with the shorter due.

Note for those taking cash equity from refinancing their loan:  The Resident Withholding Tax (NZRWT) is the amount the New Zealand IRD takes from investment interest as prepaid income tax. You are required to give the institution your IRD number, or else a punitive withholding tax is applied by the IRD.

Meanwhile for those planning for retirement, it will be beneficial to refinance into a fifteen year fixed rate loan. Usually the lenders give you the choice of rate on the fifteen year loan, say from .25% to .50% less. If you calculate properly, you will find that the loan is paid off in half the expected time, thus savings on the amount of interest paid is just great. Say the total interest paid on a $100,000, on a thirty year fixed rate loan at 7.5%, the interest you pay is $151,712 while for the same amount, on a fifteen year loan at 7%, its just $61,789.  If you are interested in how the Taylor Rule for Interest Rates in New Zealand works, this article can be helpful.

If you plan on staying in your home for more than five years, it's best not pay points to refinance. The term points means the loan origination fee. For those wanting to move within three years, be careful to watch out for penalties as some of the lenders charge prepayment penalties on their zero points loans.

Some New Zealand loans are now under the Credit Contracts and Consumer Finance Act 2003. Covered by the CCCFA are:
� Consumer credit contracts
� Buyback schemes
� Consumer leases

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(www.refinance.net.nz)