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

Take the property investor survey today

Complete the 2019 Property Investors' Survey and go in the draw to win a $100 Placemakers voucher.

House Prices

New record for Wellington prices

Wellington asking prices hit a new high in November – for the third month in a row, according to new Trade Me Property data.


Growth in NZ demand for co-working space

Developing co-working and flexible spaces in commercial properties offers big opportunities for landlords, the results of a major new survey suggest.


LVR easing will prompt modest growth

Don’t expect the housing market to take off at a runaway pace following the Reserve Bank’s announcement that the LVR restrictions will be eased from early next year.

Site by PHP Developer