Balance shifting in favour of fixed rate mortgages

NZPA

Monday 25th July 2011

Crunch time may be fast approaching for people with floating mortgage interest rates wondering whether to switch to fixed rates.

BNZ chief economist Tony Alexander said people had been holding off fixing to maximise the time paying the lowest floating rates in four decades.

Now, for all but the most risk-loving of borrowers, the balance had shifted in favour of making the jump sooner rather than later, given recent higher than expected inflation and growth data, along with rising wholesale borrowing costs.

Personally, if he were a borrower, he would be inclined to fix a portion of his mortgage in either the two or three year area, Alexander said.

That comment took account of BNZ's latest forecast for when the Reserve Bank will start raising the official cash rate. BNZ said it now expects rises of 0.25 percent in September, October and December.

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