Mortgage News

Interest rate predictions for 2013

Friday 21st of December 2012

Economists predict the official cash rate (OCR) will begin to rise as soon as next June, according to a survey by www.mortgagerates.co.nz.

Reserve Bank Governor Graeme Wheeler indicated at the most recent OCR announcement that he expected to keep the rate on hold until 2014. All but two of the seven economists surveyed expected the rate to have risen by next December.

UBS expects the first 25 basis point shift in June next year, JP Morgan and HSBC expect it in December, and BNZ and HSBC think it is likely to come in December.

Craig Ebert, of BNZ, said the bank had been picking that date for some time. He said BNZ was taking a firmer view of inflation over the medium term than the Reserve Bank.

By March 2014, all but one expect the OCR to be at least 3%.

Infometrics expects that the OCR will have reached 5.75% by December 2015, while GNZ expects it to reach 3.25% in September 2014 and stay at that level for the next year and a half.

BNZ says the rate will have reached 3.25% by March 2014, and will rise to 4.5% by December 2015.

UBS  is picking the rate to reach 3.% by next March and stay there for at least a year.

Floating rate predictions

Floating rates will have risen to 8.6% in three years, one economist is predicting. Gareth Kiernan, of Infometrics, thinks floating rates will stay constant at 5.9% all next year but start rising next December. From then, the rise will be sharp, reaching 7.5% by the end of 2014 and then 8.6% by 2015.

He said by that point the global uncertainty should be diminishing and economic growth picking up. “It’s a case of starting to return monetary conditions to something more normal. Interest rates are unusually low and won’t continue forever.”

Paul Bloxham, of HSBC, predicts a more gradual increase, with floating rates inching up over 2013 and 2014, to reach 6.9% by December 2015.

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Comments (1)
Simon Rule
Jeff is right about overpaying to reduce your debt whilst interest rates are cheap but fixing for 2-3 years now in the current interest rate cycle is unwise. The banks would all love you to commit to a fixed rate (given how busy they are poaching one another's customers) but the savvy borrower is wisely remaining on floating leaving their options open. If you can get 5% p.a. or close to it floating why would you commit yourself to a fixed rate now when rates are so stable and likely to be so for sometime yet? The trouble is most kiwis simply don't know there is plenty of wiggle room for the banks to heavily discount their floating rates so they naturally gravitate to the cheapest rates been advertised which are fixed.
0 0
12 years ago

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