Economists generally agree that mortgage rates will not begin to increase until the second half of this year.
The issue they have not addressed is the impact of a mad rush to fix. Just about everyone I talk to “intends” to fix once rates start to increase.
This creates a problem. Put simply, the market cannot cope with about $30 billion of home loans wanting fix all at the same time!
As a result I expect floating rates to gradually increase BUT fixed rates to increase rapidly.
With floating rates currently around 6.20% and the 2 year fixed rate around 6.50% my view is that the 2 year rate offers the best value-for-money.
You could fix half of your debts now, or you could wait a few months. But don’t wait too long or you may quickly miss the window of opportunity!
John Bolton is the owner of Squirrel Mortgage Brokers. He is a regular market commentator and a previous GM at ANZ National Bank. Squirrel Mortgage Brokers are the independent mortgage experts.