Time to fix: Westpac
Since mid-November last year the fixed versus floating section of our Weekly Economic Commentary has consistently said "fixed rates are currently good value, given where we think floating rates are heading."
But we've also been saying "there is no immediate pressure on fixed rates to rise, so borrowers can afford to wait a little longer." In other words fixing was a good idea, but waiting a while and then fixing was probably even better.
As it turns out floating mortgage rates have remained low and fixed rates have fallen, so floating was indeed the best strategy. But the balance of risks has changed over the past few weeks.
Swap rates have risen sharply in February. Swap rates are akin to a "wholesale" fixed interest rate, and when they rise retail rates tend to follow.
If these higher swap rates are sustained - and we think they will be - fixed mortgage rates will at least stop falling, and could even begin to rise.
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