Jumping off the short-term interest rate bandwagon

While borrowers have flocked to floating to one year fixed term home loan rates over the past year in anticipation of interest rate cuts one mortgage broker urges his clients to think about the ramifications carefully.

RBNZ data show of the total $7.6 billion residential lending in November, 47.4% was taken out by borrowers on floating interest rates.

Campbell Hastie of Hastie Mortgages says while it is tempting to look at the shorter term rates they do cost.

The major banks’ floating interest rates are in the 7.25-7.45% range compared to 5.49-5.59% for a two-year fixed rate.