Two year fixed rates best home loan option
Monday 5 July 2004
Economists currently think short-term wholesale interest rates, and therefore floating mortgage rates, are heading higher, especially since the New Zealand economy has been growing faster than expected and global growth is picking up.
By The LandlordAnthony Byett, chief economist at ASB Bank, reckons variable home loan rates will probably reach between 8.5% and 9% within the next 12 months.
ASB and three of the other four major home lenders currently charge 8% on their floating mortgage rate while Westpac is charging 8.1%.
Bank of New Zealand chief economist Tony Alexander says the Reserve Bank’s Official Cash rate (OCR) could peak at 6.25% "with a risk of something a tad higher.
But that’s the easy bit. The majority of home lending in New Zealand is on a fixed-rate basis.
With longer-term rates more influenced by what’s happening to interest rates globally and particularly in the US, last week’s move by the US Federal Reserve to raise rates for the first time in four years seems to imply longer term rates will also move higher.
Alexander’s advice to borrowers is that fixing for two years currently is the best option.
Read More - Opens in a new window
Commenting is closed
It’s full steam ahead for the Stevenson Group’s $800 million, 361-hectare industrial and residential development in South Auckland – despite the uncertainties of the post-Covid-19 era.
Periods of house price decline are rare and "short-lived", says economist Tony Alexander, amid forecasts of a drop of 10%-15% this year.
The Reserve Bank says the commercial property sector is vulnerable to the Covid-19 crisis. But PMG Funds' chief executive believes that while there’ll be short-term pain, the biggest long-term impact will be structural change.