Fixed rates rising quickly
Weekly Home Loan report: Fixed rate mortgages are moving upwards fast, with some lenders increasing rates more than once in recent weeks.
Wednesday, March 28th 2007, 5:18AM
by Maria Scott
Today it has withdrawn its seven-year rate.
Banks are paying more for mortgage funds because of the continued demand for housing finance and because economic indicators suggest that the official cash rate may have to rise again.
ANZ and the National Bank have announced three sets of increases to fixed rate loans since the OCR increase. The banks are now charging more than their mainstream competitors across all terms. Over five years, for example, their rates are 8.6% compared with 8.15% from Westpac and from BNZ on its Standard and FlyBuys, ASB is charging 8.30%. ANZ’s five year rate is now the same as the two-year rates charged by ASB and Westpac and by BNZ on its Standard and FlyBuys option. BNZ’s Classic Unbeatable 2-year fixed rate is now at 8.42%.
However, this market is moving quickly and ANZ/National’s competitors may soon follow them upwards.
Five year rates had become popular in recent weeks because they were cheaper than loans over shorter terms. But now that they are edging up towards the shorter term rates or even on a par with them, depending on the banks you compare, borrowers may feel it is risky to tie themselves in over five years.
The trend in interest rates over the last year has defied the prediction of most market watchers; that rates would have peaked by now.
It is looking increasingly attractive to avoid trying to second guess the market and hedge bets by borrowing some money over a short term and some over a longer period.
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