Next big issue for mortgage advisers

The question hovering on mortgage advisers’ lips is when they should start pointing clients to longer fixed interest terms on their mortgages.

New Zealand’s mortgage book has 81% of borrowers on short-term fixed rates of less than a year in anticipation of another 120-125 basis points cuts to the OCR over the next six months.

Kiwibank economists Jarrod Kerr, Mary Jo Vergara and Sabrina Delgado in their most recent podcast say they are fielding a lot of questions from advisers and real estate agents on when it will be the right time to start locking in longer terms of two years plus.

In chief economist Kerr’s opinion, not yet. “We’ve got to see the RBNZ’s predicted OCR rate cuts this year coming through and then economists like us calling the end of the cutting cycle to coincide with people going okay, there's no more rate cuts.