The seven considerations in deciding to float or fix

Falling funding costs have led to a round of cuts in fixed rates. In the BNZ Weekly Overview economist Tony Alexander says new borrowers or those floating should consider fixing, but there are many caveats which mean for many, floating will remain the preferred option.

Alexander says last week BNZ noted retreating expectations about the speed with which monetary policies would be tightened around the world which on the face of it argues for staying at a floating rate as long as possible and taking a punt on the Reserve Bank pausing in their tightening cycle.

However, he says at the same time these changing offshore tightening expectations have reduced medium to long term funding costs and produced lower fixed housing rates here in New Zealand.

"So now we need to examine things again to see if we are still slightly in favour of floating or whether one might want to jump into one of the newly discounted one to three-year fixed rates purely in an opportunistic manner as discussed since the middle of last year."