Cheapest mortgages could hit 8.5pc

Monday 13 December 2004

The cheapest mortgage rate in the market could keep rising toward 8.5 per cent by the end of next year from less than 7 per cent now, according to a "high scenario" forecast by the Reserve Bank.

By The Landlord

For the first time, the Reserve Bank has forecast average mortgage rates for the next couple of years. It was seen as another shot across the bows of the housing market that interest rates are still heading up, even though hot competition among banks has caused fixed-term rates to fall in recent weeks.

Reserve Bank governor Alan Bollard said yesterday that more official interest rate rises could not be ruled out next year, dashing expectations that rates may dip by the middle of next year.

"There is still a 30 to 40 per cent probability floating mortgage rates are going up before the middle of next year," Bank of New Zealand chief economist Tony Alexander said.

An official interest rate rise could come as soon as late January or the middle of March, which would push floating mortgage rates to 9 per cent, he said.

Read More - Opens in a new window
Commenting is closed

Property News

Major industrial development powers on

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.

House Prices

House price drops are short-lived - Alexander

Periods of house price decline are rare and "short-lived", says economist Tony Alexander, amid forecasts of a drop of 10%-15% this year.


Resilience needed in face of change

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.

Site by PHP Developer