Mortgage rates have troughed: ASB
Mortgage rates have hit their low point in this cycle and the next move is up despite the latest Covid outbreak, say ASB economists.
Wednesday, September 15th 2021, 9:36AM
The big four bank has compiled its latest home loan rate report, reiterating that mortgage rates will climb regardless of lockdown settings.
"Despite New Zealand’s latest Covid-19 setback in August, we continue to think we are past the low point for interest rates," the bank's team said.
The comments come as the big four and challenge banks hike rates in the middle of lockdown.
TSB became the latest to lift 18 month to five-year fixed terms this morning.
"Fixed-term mortgage rates have been lifting over 2021, and our forecasts suggest more increases are coming for mortgage rates over the rest of the year.
"The resilience of the local economy since the initial shock of the pandemic, and confidence in the longer-term outlook, are the reasons we continue to forecast higher interest rates, including mortgages."
ASB predicts the official cash rate will jump to 1% from 0.25% over the next six months, with a further jump to 1.5% by the end of next year.
As ever, borrowers face the dilemma of whether to lock in longer-term fixed rates or roll over shorter terms.
ASB said rolling shorter terms "could be undermined by the prospect of a swift lift in the OCR and mortgage rates over the year ahead, once the current uncertainty passes".
It said fixing for longer terms "provides interest rate certainty at slightly higher costs".
"For those who want this longer-term interest rate certainty now, the cost of fixing for two to five years is still very low compared to the past 20 years," the ASB team, including Chris Tennent-Brown, said.
| « OCR hike likely despite lockdown: ANZ | Prospa raises A$200 million for business lending » |
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