by Paul McBeth
It's no surprise that mortgage rates were on the rise last month, says the Real Estate Institute.
Following a lift in the Official Cash Rate mid January, most lending institutions bumped up their floating and fixed mortgage rates in the month to February 10. The Institute's latest monthly survey showed floating rates at 6.50 to 7.60 per cent, compared with 6.50 to 7.25 per cent the previous month.
One year fixed rates lifted 50 percentage points, now ranging from 6.85 to 8.50 per cent, while five year rates are as high as 9.35 per cent.
Bank of New Zealand chief economist Tony Alexander says his personal preference - still - for mortgage borrowing this month is two years fixed and maybe a portion floating.
In this month's New Zealand Observer, Alexander says he's not keen on one year fixed rates at the moment, because most people are likely to panic when their loan matures and refix at high levels.
"I also don't much like three years and longer because, in about 18-24 months' time, floating rates are likely to be coming back down again and one risks being locked into a relatively high rate for too long a period of time.
"You can currently borrow two years fixed at about 8.55 per cent. This is less than one per cent above the floating rate which we forecast will be near 9.5 per cent by the end of the year with a risk that the floating rate will rise higher and not come down as early as we project."