In the BNZ Weekly Overview economist Tony Alexander says modelling this scenario produces an expected floating mortgage rate over the coming year of 6.9%. This compares to the Mortgagerates.co.nz median for the major banks of one year fixed at 6.45%. For two years BNZ forecasts an average floating rate of 7.6% versus the current major bank median of 6.99%. For three years BNZ forecasts an average floating rate of 7.9% versus fixing at the major bank median of 7.28%.

Alexander says BNZ's analysis still falls slightly in favour of fixing two or three years rather than floating. So personally he would fix three years expecting that by April next year the floating rate will be above the current three year fixed rate and the floating rate will probably be above the current two year fixed rate of 6.99% come March next year.

Alexander notes that the Reserve Bank would still have to pause for near a full year in their tightening cycle to be worse off fixing over the next two or three year periods than floating.

"But for most people making the jump from a still very low floating rate to a higher fixed rate is a big call - something which came through quite clearly in an internal survey we ran this week of our front line people."

BNZ asked them what people are generally doing with their mortgages at the moment. The tone is most floating, a few more recently picking away at fixed rates and most feeling the Reserve Bank will not tighten as quickly as many expect as they feel the economy is still quite fragile.

To see some of the replies to the survey click here