Fixed, Floating or split between the two.

[unhinged]

With last weeks increase in the OCR, I have been carefully reading whatever commentary I can find on what economists think is going to happen to the current interest rates. (examples www.interest.co.nz., BNZ, National Bank, Stuff). Currently I have several mortgages on floating and struggle to reason why I would fix these at the moment ( or even a portion of them) and pay $100 a week more? The gap between floating and the two year rate is approx. 1.0%. With Bollards latest statement last week it could be 9 to 12 months before the floating rate reaches the current 2 yr fixed rate, so long term, probably means little or no saving over the next two years if you did fix now. The fixed rates could even drop lower?

What are others thoughts on here and what are you doing, floating, fixing or a mixture of both?

Saw a broker last night and he hasn't had any indication yet from any of the banks of who will move first after last weeks OCR rise, who has a reliable crystal ball?

[kirschbaum]

You should also check out http://www.squirrel.co.nz for good commentary on interest rate trends. They are our mortgage brokers, and JB has been pretty accurate with his predictions over the last year or so.

[ChrisD]

The fact is that it's all crystal-ball gazing, so you can only design your loan around your own risk profile. We were floating 100% on our PPOR until last week. I went against all advice and fixed half of the loan at 7.29% for 4 years. Even 7.29% is well below the long term average rates, and our average rate over the two loans as of today is something like 6.40%. We have the benefit of half the loan at the low floating rate, and the other half gives us some certainty for the next four years.

What I don't understand is why the current advice seems to be to fix for 1-2 years. The only thing we know for certain is that in 2 years the rate will be significantly higher than it is now. I don't want to come off a fixed term and be stuck with a high rate, especially as the floating rate at this point is likely to be even higher than the 2 year fixed.

[Bluekiwi]

You should also check out http://www.squirrel.co.nz for good commentary on interest rate trends. They are our mortgage brokers, and JB has been pretty accurate with his predictions over the last year or so.

Anyway you can sign up to this and have it e-mailed to you, or advised that a new blog is out, I have had a search around but cant find anything.

[unhinged]

Thanks for the advice on squirrels blog. It is getting even more interesting now that ASB has moved and raised its floating rates today and dropped its fixed. Waiting to see what my bank is going to do in the next few days or so now the movements have started. Then will probably assess our position and decide just before Bollards next announcement is due what to do.

[WGN ex-property manager]

I am floating all the way, until I can pick up 5 yr fixed at 7.25% or lower

[Psilan]

7 year fixed with BNZ just went from 8.4 to 8.3.

I hate this feeling...I was just happy about seeing 9y9m left on my mortgage and now I am watching it creep up.

[Psilan]

I just got offered 6.95% @ 3 years. Going to think it over tonight.

[[email protected]]

As the yield curve flattens we could see rates go north. Keep close to your broker but don't fix yet.

[graemeh]

I just got offered 6.95% @ 3 years. Going to think it over tonight.

If I was you I'd take it. In the past any time you can get money long term for under 7% it's worth doing.

[Property Man]

The only thing we know for certain is that in 2 years the rate will be significantly higher than it is now.

I find this point interesting as ChrisD knows for certain?

We can always analyse economic conditions but we can never be certain, otherwise we would bet our lives on it!

Regards
Aaron

[SwissKiwi]

I just got offered 6.95% @ 3 years. Going to think it over tonight.

Who has offered you that?
My best offer is 7.05% @ 3yrs from NBNZ

[Psilan]

BNZ. Still can't decide...
I have asked for a 4 and a 5 year offer.

[SwissKiwi]

Nice rate -

what kind of business do you have with them to negotiate that figure?

[Psilan]

Not a huge amount.

I have Total Money accounts with them including a small sub-200k mortgage.
But I have been with them for about 9-10 years. (and I'm under 30)
They know I am planning on up-sizing in the near future.

I am also very polite when I ask!