Floating and short-term rates are "more appealing" than longer term loans as the surge in demand for fixed-rate mortgages drove wholesale rates "dramatically higher in a short space of time," according to ASB's latest home loan rates report. The bank said short-term mortgages are probably at the bottom of the trough, but there is scope for them to go lower.

"We are most likely past the low point for mortgages such as the five-year term," the bank said in its report. "Longer-term rates are more at the mercy of the huge amount of government debt that is going to be issued both here and abroad."

Five-year mortgage rates are on the long-term average at around 8%, while floating rates are expected to stay near 6% to 6.5% and short-term rates are unlikely to move much in the coming months, and long-term term rates have a "high cost relative to very low short-term rates," the bank said.

The current 8% for five-year rates is the equivalent of fixing for two years at 6.25%, then re-fixing for three years at 9%, and ASB's forecasts aren't that pessimistic for three-year terms.

The bank does give a rider that there's a possibility interest rates could rise rapidly, and stresses the five-year rate offers mortgage holders a level of certainty over their future financing.

Fixing a mortgage shouldn't only be influenced by the rate, but also by personal circumstances, ASB said.

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