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MR - Experts Views

Floating rates now a little more attractive

Thursday 10th of September 2009

"The incentive to stay floating has been enhanced while the benefit of switching to fixed has been reduced with rate movements down and up respectively," Alexander says in this week's BNZ Weekly Overview.

But while even more people will now choose floating rates and the toss of the coin is weighted a "tad" more towards the floating option rather than fixing for two or three years, Alexander still sees benefit in the certainty of a fixed rate.

"By all means take advantage of a nice low floating rate. But don't do so thinking that you will be able to make a jump into a secure fixed rate when floating rates start rising and you will still get a low fixed rate. You won't," he says.

Alexander believes the Reserve Bank of New Zealand (RBNZ) will increase the Official Case Rate (OCR) sooner than the "latter part of 2010" that it reaffirmed this week, with the BNZ expecting  a rise in July.

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