Short-term interest rates looking good

Tuesday 15 January 2013

If you have a mortgage, it’s probably one of those things that’s in the back of your mind: Is it time to lock in a fixed rate?

By The Landlord

Interest rates have been bobbing along at historically low levels for a while now and many homeowners are floating on variable rate mortgages.

Economists say getting the timing right on the move to a fixed rate is a bit like a lottery draw.

It’s unlikely that anyone will hit the true bottom of the interest curve except by pure luck.

But when short-term fixed rates are quite a bit cheaper than floating, it makes sense to put at least part of your borrowing on to these lower rates just for the money you'll save.

According to, most floating rates are sitting between 5.7% and 6.2%. You can likely get a bit of a discount off this with some negotiation but they are still well above the 5.25% on offer for loans fixed over two years.

And some brokers are saying they are getting rates below 6% for five years for their clients, so it’s well worth looking at the longer-term options.

Of course, there’s always the threat that interest rates will rise in the meantime but it looks unlikely that the OCR is going to move anywhere any time soon.

The Reserve Bank has indicated that it would rather deal with any house price inflation with macroprudential tools such as loan-to-value restrictions rather than risk dampening the entire economy with the blunt tool of rates hikes.

It is definitely worth putting some thought into your rate strategy this year. A mix of six-month, one-year and two-year loans could be the solution to provide certainty, cashflow benefits and the freedom to nab good long-term rates as they become available.

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

Don’t count on a market upturn

It’s been a spectacular run for the market but this property cycle has done its dash and recent positive developments aren’t likely to cause a major upturn, one top economist says.

House Prices

Gloomy expectations around Super City

Auckland house price expectations have turned negative for the first time since 2009 with a new ASB survey turning in a gloomy outlook on the market.


Changing world, changing property market

Technology and changes to the way people work are set to transform the commercial property sector and investors need to be attuned to these developments.


Investor lending weak in March

The latest Reserve Bank lending data reveals investors borrowed more than $1 billion in March, the highest figure since November, but a 10% fall on the same period last year.

Site by PHP Developer