RBNZ expects to catch more borrowers when it hikes OCR

"Borrowers will no longer be able to ‘slide out the yield curve' to avoid the impact of a policy tightening," Deputy Governor Grant Spencer told investors at the Credit Suisse Asian Investor Conference in Hong Kong.

In January, some $161.7 billion worth of mortgages, or 65% of the total value of lending for residential housing, was on a floating or fixed rate of less than a year, according to central bank data. That's a change from 2007, when the central bank last embarked on a tightening cycle, when almost three-quarters of mortgages were on long-term fixed rates.

"Fixed-term rates on loans/deposits are considerably higher than rates on short-term loans/deposits," Spencer said in speech notes published on the RBNZ website. "This means borrowers are increasingly moving to floating rates or short-term fixed rates which will be quickly affected when monetary policy is tightened."  

Economists predict the central bank will start hiking the official cash rate in June from its record-low 2.5% as the economy continues to recover at a subdued pace from its worst recession in 18 years.