Still scope for rates rise
Fixed rate mortgages could still firm over the rest of the year, following two consecutive months of rates rises.
Wednesday, July 14th 1999, 12:00AM
by Paul McBeth
Fixed rate mortgages could still firm over the rest of the year, following two consecutive months of rates rises.That contrasts with floating mortgage rates, which remain stable and which aren't generally expected to move much for the rest of 1999. However, they're likely to be higher than current levels over the next three or four years.
The key influence on our fixed rates continues to come from the US bond market. While there have been some recent signals from American central bank the Federal Reserve, ASB economist Anthony Byett says that market "is still to-ing and fro-ing and it's not clear whether (local) rates will go up or down".
"I could easily say they'd be 50 (percentage) points higher by the end of the year, but I could equally paint a scenario that said they'd be 50 points lower."
Byett says no major movements are expected, "just some tinkering either way".
Max Oliver, National President of the Real Estate Institute, says that the broad expectation is for fixed rate mortgages to keep firming over the rest of the year. As shown in the institute's June mortgage survey, most major lenders have boosted their fixed rates by around 0.2 to 0.3 percentage points. One year rates now range from 5.95 and 6.35 per cent and five year rates from 7.5 to 8.25 per cent (for more details, see our mortgage table).
"It's clear that the banks expect interest rates to continue to firm for the remainder of 1999," Oliver says, "so we must consider that the best of the low rates is over."
Earlier stories:
Continued rates rise shouldn't be cause for alarm
To fix or not to fix