Finally it has happened

As noted in previous home loan reports over the past couple of weeks BNZ has been holding back on increasing its fixed rates while the major banks increased their rates in response to rising swap rates in the market.

Its three, four and five year rates have gone up 15 points each and the two year rate 9 points to 7.69%.

It appears the two-year rate is where it wants to focus attention as the rate is an unusual number, 7.69% (normally banks set rates in fives or tens). This rate puts it just one basis point below a couple of second tier banks such as TSB and Bank Direct.

The big economic news over the past week has been the Budget, but being such a ho-hum affair it had little impact on the markets and no effect on home loan rates.

During the week we have seen the trend for fixed rates to increase. Most of the action has been in the area of terms of two years or more, but there has been some, albeit fewer, increases in the shorter terms.

What's the best deal strategy at the moment?
There is still some divergence in thinking on how long to fix for. For instance Westpac is saying the cuts when they come will be fast and sharp.

"We continue to advise fixing for relatively short periods. Meanwhile BNZ is saying if you want to get a rate around recent historical averages fixing three years or beyond "looks good".

"Overall it looks like rates will be lower in a couple of years time and for that reason we can't find any especially strong reason for avoiding the two-year fixed interest rate currently."

To compare mortgage rates visit the Good Returns Mortgage Centre http://www.goodreturns.co.nz/section/2.html

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