by Paul McBeth
All mortgage lenders surveyed by the Real Estate Institute have raised their floating and one-year fixed mortgage rates in the last 30 days. Meanwhile, BNZ chief economist Tony Alexander is forecasting rates will go up "a wee bit more": floating rates as much as one per cent higher by mid next year and fixed rates 0.3 per cent beyond two years.
The REINZ says that floating rates now range between 7.75 and 8.8 per cent, compared with a spread of 7.25 to 8.1 per cent the previous month. Nearly every lender also put up their two to five-year rates over the period.
The Institute's National President Max Oliver said that, back in November, a family with a $100,000 mortgage would have faced average monthly mortgage payments of about $732. At current interest rates, that's increased to about $868.
Oliver also hit out at recent increases in the Official Cash Rate and said that rising interest rates were a major factor in the difficult residential property market.
"That rising rates are stifling sales volume in the house market is obvious to most. However, the majority of New Zealanders still fail to understand why the Reserve Bank continues to raise the OCR for the sole reason of controlling our almost negligible inflation rate, resulting in an extreme loss of business and consumer confidence."
Meanwhile the BNZ's Tony Alexander, writing in the bank's latest New Zealand Observer, says the best choice for high risk borrowers at the moment would be "float and await an equity crash". His serious pick for home borrowers this month (based on the BNZ's interest rate forecasts and assuming you don't repay your mortgage in the next seven years) is that fixing one year is better than floating for that period.
For medium risk borrowers, then, he suggests fix one year and then fix for a year again. And low risk: fix two years.
As for ultra low risk borrowers, "Fix three years plus and listen to less talk-back radio".