Keep floating?

Question from EL updated on 5th December 2012:

Currently it seems the OCR is not likely to go down, I'm at a special rate of 5.25% floating for my three properties (two investments). Should I fix it or wait for another six months. My two investments are interest only with 100% loan on LTC. 

Our expert Kris Pedersen responded:

If I understand correctly, you have your own home and all securing your two investment properties all with the same bank. Note that while it is easy to look at the carded rates that are being offered (the rates quoted directly off the bank website or off sites like mortgagerates.co.nz) to do a fair comparison on whether it is best to fix or float you need to have a good idea on what the discounted fixed rate options are while also looking at what may happen with rates in the short to medium term.  The continuing Eurozone issues may push the swap rates lower again meaning that you may yet potentially have a chance of getting a cheaper fixed rate and in the meantime waiting on a floating rate of 5.25% is a good place to be. If you do want certainty however the fixed rates are still a long way below their 10 year average so you are unlikely to lose too much by locking in now if you decide to opt for safety.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.propertyfs.co.nz

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