Fixed Interest Rates New Craze?

interest-rates-nzAccording to latest statistics for New Zealand’s home loans on a wide-scale basis, fixed mortgage rates are gaining the upper hand over floating rates.
The latest Reserve Bank information shows that $91.2 billion of home loans are based on floating rates, and $93.3 billion of the total is fixed; that’s a $2.1 billion difference. Over the last month, these figures have seemingly switched places.

However, despite these total lending figures, more loans are floating than fixed – 879,237 are floating rate, compared to 543,100 fixed rate mortgages.
Right now out of NZ’s floating-rate loans, $48.8 billion is fixed for less than a year, and $33.4 billion is fixed for just one to two years. We’re seeing increasing amounts are being fixed for two to three years, as is evident from past months; $7.4 billion in May compared to $7.1 billion in April this year.

This increasing trend of fixed rates has come at a time with ever-increasing signs that the recent super-low mortgage rates are about to come to an end. As such, fixing could be a good strategy for borrowers; according to financial experts, there’s an increasing urgency among mortgagees to fix before these rates head skyward.

One investment expert said “People are seeing what’s happening around the world, and forming the view that interest rates are not going to go much lower.”
He said two-year rates in the 5% range would look like a good option to a lot of borrowers.

It has been suggested that once people start to fix their mortgages, a sudden rush of borrowers taking out these fixed rate home-loans may actually send rates in an upward direction, so it looks like a short matter of time before NZ’s low rates begin to climb and many New Zealanders look to fixed rates as a better borrowing strategy.

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