Fixing still in borrowers best interests

Sharon Zollner

In its Housing Market Overview, the bank says, as has been the case for some time, the one-year fixed remains the lowest rate. But even lower rates are unlikely as wholesale interest rates rise and the economy rebounds.

In ANZ’s view, the OCR and wholesale interest rates are unlikely to go lower from here.

“The economy simply doesn’t need it, and if wholesale interest rates aren’t likely to fall, history suggests mortgage rates aren’t either, and we don’t think the RBNZ’s Funding for Lending Programme changes that,” says the bank’s chief economist Sharon Zollner.

The key question for borrowers is: does it make sense to fix for longer? The bank thinks it does. And given the low margin between two and three-year rates, and four and five-year rates respectively, there is merit in adding some three and five-year terms into the mix.