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14895 posts

Uber Geek
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# 139179 30-Jan-2014 12:02
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So the OCR and hence the floating mortgage rates are staying the same this month, though the reserve bank have indicated it will likely rise in March. The forecasts are floating mortgage rates will rise from around 5.75 now to around 7% by the end of the year. Fixed rates have already gone up in anticipation. Beyond that is anyone's guess. I also read a comment that as fixed mortgage rates are rising already perhaps they may need to raise the OCR less, so floating mortgages may rise less.

What are everyone's strategies for their mortgages? Float, fix, or a bit of both and different fixed terms? If floating goes up to 7% and sticks then staying on floating wouldn't be so bad, as fixed rates aren't far off that already. You also have to take into account that if you fix now for 36 months at 6.6% what would the average rate you'd be paying over that period if you were floating, and what's the rate likely to be when you come off that fixed term?

Right now I'm floating, I saved a lot of interest by breaking out of a fixed term just before the rates took a dive. I don't see much point of fixing for less than three years, as I think the average rate I'd pay could be less on floating. If I go to 4 years that's 7%, which may or may not be less than the average floating rate between now and then.

I guess it's crystal ball gazing, but interested in everyone's thoughts.

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463 posts

Ultimate Geek
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  # 977495 30-Jan-2014 15:17
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bazzer: Long term, I believe it is fruitless to try and outplay the banks. You may come out ahead over some periods but over 15-30 years of your mortgage it probably makes little difference and not really worth worrying about.

+1 You are basically entering into a betting match with a bunch of highly paid economists at the bank.  The only way you win is by being lucky.

If a sharp rise in interest rates would put you under financial stress, then cover your bases by fixing some, floating some or fixing for different terms.

The banks will always offer a small discount to fix, so I generally fix every 6-12 months, which is pretty much floating anyway.

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