[Updated] What will happen to interest rates?
Sunday, July 24th 2011, 11:35PM
Lots of news today, and one set of rate changes. First up we have our survey of what economists think the Reserve Bank will do with the OCR this week. There are some divergent views coming through now and borrowers need to focus on their interest rate strategies.
Some, like John Bolton at Squirrel, are suggesting it's time to fix half your mortgage now if you are worried about rising rates. Likewise BNZ economist Tony Alexander is suggesting moving a portion of loans to fixed rates (he says three years). He also warns that at this point in the interest rate cycle forecasters tend to under-predict the eventual peak and borrowers would do best to run their cash flow projections assuming a 6% cash rate come the end of 2013.
The lender to move is PSIS which has added 10 basis points to each of its two and three year rates and 20 points to its four year rate.
The other bit of news is the receivership at NZF Money on Friday. As we understand it this is just the company's deposit taking side of the business. Its other operations, including lending and broker services, are outside of this. While NZF used debentures to help fund its lending operations it still has warehouse facilities with the likes of Westpac and it also securitised some loans.
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