Value of mortgages on floating rates heads towards record high

Value of mortgages on floating rates heads towards record high

The value of mortgages on floating, as opposed to fixed, rates looks set to reach its highest level since Reserve Bank records began.

Reserve Bank data shows as of September 40.3%, or NZ$66.9 billion worth, of mortgages were floating.

That’s the first time the percentage of floating mortgages has been over 40% since October 2002. The highest rate on record is 43.1% in January 2000. The Reserve Bank records go back to June 1998.

September was also the first time the value of fixed term mortgages has fallen under NZ$100 billion since June 2006, coming in at NZ$99.2 billion.

And of the fixed mortgage total, NZ$53.6 billion worth, or 54%, had less than a year to run suggesting a continued rise in the number of borrowers shifting to cheaper floating rates with the Reserve Bank not expected to hike the Official Cash Rate from 3% until March next year.

The major banks are currently advertising floating mortgages rates priced from 6.09%. The lowest one-year fixed rate on offer is 6.45% and lowest two-year 6.68%. Six month fixed rates start at 6.25%.

These figures exclude HSBC which advertises a 6.05% floating rate, 5.49% six month fixed rate, 5.99% one year rate and 6.49% two year rate. However, the catch to HSBC’s low rates is customers’ must have mortgages worth NZ$500,000 or savings of NZ$100,000 to qualify for a loan. See all bank mortgage rates here.

ANZ, the country’s biggest bank, said in its annual results last week that fixed rate loans now comprise 63% of its mortgage book versus 88% two years ago.

And as ANZ's economists put it this week, with about 72% of total mortgage debt of NZ$166.8 billion at maturities of one year or less, the Reserve Bank currently has “considerable” monetary policy traction.

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7 Comments

Gotta wonder about ppls thought processes....are they taking floating simply because its cheaper?  Are they looking two years out?   Im floating becasue I expect a OCR <4% and even to start dropping as the depression bites.....If rates start to shoot will we see a huge % jump to fixed?

regards

Meebee they want the flexibility to make extra payments on prinicipal , without bank penalties being imposed .

Gotta wonder about ppls thought processes....are they taking floating simply because its cheaper?  Are they looking two years out?   Im floating becasue I expect a OCR <4% and even to start dropping as the depression bites.....If rates start to shoot will we see a huge % jump to fixed?

regards

What depression is this , steven  ? You've  been following Chicken-Little Hickey's " Top 10 " stories too literally ............. Can't be a depression , when GDP's are rising , unemployment is falling ( see the USA figure over-night ....... go figure ! ) , and energy is so freely abundant and cheap .

These are the good times , come out of the cave , and into the light !

Steven Steven Steven - I suspect you will be one of those trampled in the rush to fix their rates, but you will have totally misread the signs and missed out fixing at an attractive rate. Hold on bro because the Bucking Bronco is about to be unleashed. Enjoy the ride. 

I stand by my previous comment that we as a country  cannot afford to let Aussie get too big a jump on us, and unfortunately all things considered their higher rates will attract investors whilst we sit here, pontificate and get lost in their wake.

 

churr churr

Cmon cuzzies, smell the roses. Look at the data, the trends and it is all self explanatory.  The figures indicate what we all know, that financially everyone is getting squeezed and those with mortgages are hurting.These latest figures arent a revelation but a confirmation of this. Trends are exactly that and are not instantaneous, and as mortgages come up for renewal we all desire to have that extra buck in our pocket, but one has to be astute enough to read the signs that the "good times" are coming to an end, particularly with Aussie continuing to push ahead, and unless we do likewise we will be left in their wake.

 

The morale of the story - Be prepared to keep your ear to the ground and move fast, because if you dont you will get splattered in the rush!

Likely as not such behaviour will get you a fat ear.