Rates Likely To Fall | Fixed Versus Floating

20 NOV 2015

From our Mortgage Broker


Rates Likely To Fall

We believe the Reserve Bank will cut the OCR (Overnight Cash Rate) before Christmas. There are several reasons for this. Unemployment has risen to over 6%, for the first time in three years. This signifies that growth is slowing, particularly in some provincial areas. There are concerns about our high exchange rate, which does have an impact on the exporting sector. Dairy prices remain subdued and appear likely to remain so for a few more months, due to stockpiling. There are no inflationary pressures. Consumer spending is a bit slower and this is reflected in credit card use. Taking into account the above factors, and noting an apparent slowing of the Auckland property market, a rate cut before Christmas is most likely.

Fixed Versus Floating

While a floating rate may appear a good idea in the interim, fixed interest rates are a good option for mortgage repayment certainty and to get a rate considerably lower than the current floating rate. Making a decision is not easy. Take advice from an appropriately qualified person. Interest rate risk needs to be carefully considered.