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MR - Experts Views

Forthcoming rise in interest rates could catch out property owners

Thursday 16th of July 2009

In the BNZ Weekly Overview Alexander says that in a year's time talk will be about a global recovery, the labour market being soon to improve and of house prices rising.  However, he warns that it sees scope for the Reserve Bank (RBNZ) to hike the cash rate by over 3% to nearly 6% by the end of 2010.

"The resulting jump in floating rates could catch out a whole new cohort of "investors"," he says.

Hedging against the risk of rates rising over the next two to three years remains the best borrowing option currently, Alexander says. He is sticking fast to his preference of a three year fix at 6.99% as the most favourable choice for borrowers at present.

"But most people don't think that far ahead and will currently be assuming low rates will continue for a long time because the RB have indicated they will keep their cash rate low until some point late in 2010. Maybe," he says.

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FMA outlines its latest expectations for advisers
Paul Flood: The danger is that the 'goalposts' (regarding what is acceptable or unacceptable adviser conduct) may be susceptible to change. Our 'Principles based' legal/regulatory environment lends itself to “prevalence-induced concept change” over time, perhaps not so much in the written laws and Code, as in the interpretation of the prescribed principles.
11 hours ago Steve Wright
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Just a tip, if you use more than six, six letter words in a sentence you lose most Kiwi's. So avoid client/adviser confusion when writing your post or article if you would like it read and understood. Ironically, my last sentence was not likely read.
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