Floating rates sink

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Floating term mortgage interest rates have eased across the board, while fixed rates firmed in the past month.

Friday, August 15th 2003, 7:09AM

In the month to August 10, 14 of the 18 institutions surveyed by the Real Estate Institute have increased their fixed rates between 0.05 and 0.65%, with most fixed rates raising by 0.25 to 0.35%.

The trend in fixed rates reversed from last month, when the majority of fixed rates dropped by 0.25 to 0.35%.

Conversely, floating rates eased by 0.20 to 0.25%, with 15 of the 18 mortgage providers reducing their rate by 0.25%. The current floating rates available range between 6.40 and 7.10%, compared to a range of 6.65 and 7.35% in the 30 days to July 10.

Real Estate Institute national president Graeme Woodley says it is generally accepted that New Zealand fixed mortgage interest rates tend to follow the same trend line as that of the United States.

“Long term fixed rates in the US were extremely low, but have begun to trend upward, in the face of increased economic confidence, and that trend is reflected in the latest increases in New Zealand fixed rates.

”While it’s highly possible that the Reserve Bank will cut the Official Cash Rate by 0.25% in September, this will only serve to keep floating rates and short term fixed rates at a lower level, and the gradual tightening expected in New Zealand monetary policy following this will see these rates eventually rise as well. Thus the long term prognosis is that fixed rates will continue to increase.”

In terms of the best option for homeowners, Woodley noted that despite the latest increases in fixed rates, the terms available were still very attractive.

“Long term rates are still extremely competitive and as it seems likely that they will only continue to rise, a fixed term arrangement is well worth considering."

For a full list of mortgage rates CLICK HERE

To graph historical mortgage ratesCLICK HERE

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