We just refixed (about a month ago I think) at 6.74 for 18 months (that has a .15% low equity penalty, so actual rate 6.59). I did a LOT of research before doing this and found it to be the best rate for the best time. Most people I talked to said 18-24 months is the best value atm, capped is better than floating.
Reading articles over the net from various institutions, the common thread is that the OCR will probably rise in June, which is why rates (esp longer term ones) are increasing. The floating rate will then begin its rise to match current fixed rates and fixed rates (2 and 3 years) will hover around 6.5-7.5% for a while. Obviously it's all speculation but we did do a lot of research and went with our decision based on this.
we like watching interest.co.nz - was very useful to see rates and watch them for a few months before we re-fixed.
We're 100% floating and our rate is 5.59%pa (BNZ Total Money). We don't have any intention of fixing in the very near future.
Tony Alexander does a good economic commentary and has some predictions for where he sees rates going, but of course it is crystal ball stuff. You can find him on the BNZ website.
I will attempt to explain it.. (feel free to correct me anyone) Basically if you have a 250k loan it is a good idea to have something like 100k fixed for 1 year and 150K fixed for two/three or something like that in case of rate rises/falls.. imagine fixing 250k for say 2 or 3 years at a high interest rate (say 9%)and watching as interest rates drop... at least this way you can capture some of the fluctuations..... of course it an work the other way too with rates rising.
Some people feel more comfortable having the whole lot fixed on one rate and knowing certainty within their budget for the next few years... I would only do that if it was a bargain say 5.15% or something.
We have just bought a new place and re-fixed our loans we have some on 1 year rate and some on a 18 month rate. Hopefully this will hedge our bets a bit. Luckily we haven't gone too wrong so far :-)
Yep Snooze pretty much summed it up. It means if you make what ends up being a bad call (fixing for ages at a high rate like you and I both did in 2008 ) it doesn't affect your whole mortgage, because hopefully the way you've fixed/floated the rest turns out better.
Of course the flipside is that if you've made a really great call, you won't benefit over the whole mortgage either.
We'll be splitting ours when it comes off fixed in November.
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mortgage interest rates..whats ??.....
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) it doesn't affect your whole mortgage, because hopefully the way you've fixed/floated the rest turns out better.
