The turning point has come – start fixing
Commentary from economists all year has suggested that for those on floating mortgage rates a point would come around May to June when one should hop out of the floating rate just before it started rising to take a short-term fixed rate of one or two years.
"That point, has been reached," says Alexander.
In the BNZ Weekly Overview he says the situation suggests that a borrower such as himself should consider escaping some of the expected rise in floating mortgage rates coming up by fixing two years, given the new scare in the credit markets and the good New Zealand data released recently suggesting the Reserve Bank starts tightening come June 10.
"Based on our forecasts I would do better over the next two years and three years fixing than floating. However, cash flows are important to people at the moment and lifting one's mortgage rate voluntarily by over 2% (to fix three years at 7.75%) is a big call.
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