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Over the past six months, the portion of the bank’s mortgage lending on two- and three-year fixed rates has increased by more than 20 per cent.
It’s a symptom of a move that is happening more widely.
The Reserve Bank reports that nationwide, the amount of lending on fixed rates is drawing near the amount floating for the first time in years. Most fixed mortgages are still on terms of one year or less.
But year-on-year, more borrowers are opting for longer terms.
In April 2011, there was $6.76 billion fixed on terms of more than two and less than three years. That had fallen to $5.7 billion in April 2012 but is now back up to $7.08 billion.
In the three to four-year loan space, in April 2012 there was just $912 million but there is now almost $1.5 billion.
HSBC’s head of retail banking and wealth management, John Barclay, said: “We are seeing a gradual switch from floating to fixed rates. This is not a case of all customers switching their loans in a mad rush, but rather them making strategic changes to the mix of their home loan structures.”
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May 2013. Purchased a property with a 2-year fixed rate mortgage @ 4.85%. Same bank.
Any mortgage for 2+ years below 5% makes sense, especially as it usually comes with some form of cash incentive.
The question is how long will low rates be around? The recent downward movement in the $NZ gives some scope for an OCR hike in mid-2014. But with European and American rates in the doldrums and shed loads of yen looking for a safe, interest-bearing home my pick is for any upward increase to be from early 2015.