Lowest rates have passed: ANZ

It recommends borrowers think about fixing some of their home loans for a longer term.

The report notes that house sales eased in most areas last month, although the average days to sell remains low and prices are moving higher. “A reduction in mortgage approvals may be the first indication that things have reached saturation point in the City of (House) Sales.”

The number of mortgage approvals has eased over recent weeks. The latest four-weekly total is now down 10% on the same time a year earlier.

But longer-term fixed mortgage rates have lifted in sympathy with wholesale rates, the report says, and that looks likely to continue.

ANZ said floating mortgage rates were likely to hold steady until 2014 but the time to secure the lowest fixed rates had passed. “It continues to make sense to retain some exposure to [the one-year fixed rate], which remains the lowest point on the curve. We would refrain from having too much exposure to higher floating rates, preferring to use the cheaper one-year rate as a proxy for flexibility.”

The report said there was also merit in fixing a portion of borrowing for a longer time. “It is now worth considering fixing for terms up to five years. But there’s no need to panic, we do not favour fixing the lot for a longer term.”