Interest rates expected to rise at a much faster pace

Last week most of the major banks increased their long-term interest rates as wholesale rates have been rising.

The rising wholesale rates have reduced bank margins for fixed rate lending.

“It looks like the five-year rate which previously sat around 5.29% is going back to sit 0.1% to 0.2% above the 5.49% level it was at up until about three weeks ago, Alexander says. “That is, 5.59-5.69% or thereabouts versus 5.29% last week.”

He says not that anyone is really borrowing fixed for five years.