By Gareth Vaughan
Borrowers continued moving back to fixed-term mortgages during June with the value of floating mortgages down more than NZ$4.5 billion in just two months from a record high.
The latest Reserve Bank figures show NZ$69.383 billion, or 39.9%, of banks' on-balance sheet mortgages by value were fixed at the end of June.
That's up NZ$3.3 billion from May when fixed-term mortgages comprised 38.2% of the overall total by value.
Growth came in June in fixed mortgages across all categories - those fixed for less than one year, those fixed for less than two, three, four and five years, plus those fixed for more than five years with these loans rising NZ$6 million month-on-month to NZ$17 million.
The move by borrowers back towards fixed-term loans in June follows the same trend in May, which came on the heels of a round of cuts to advertised bank fixed-term mortgage interest rates during April and May, and means the percentage of mortgages floating, by value, fell to 59.9% at the end of June from the record high of 63% at the end of April.
Overall the move back to fixed rates may be bad news for customers in the form of higher average mortgage rates.
The monthly weighted average interest rate paid on on-balance sheet floating mortgages was 5.68% at the end of June and 6.17% on fixed mortgages. However, the lowest average overall was the 6.02% in the less than two year fixed category.
The total value of on-balance sheet mortgages floating was NZ$104.246 billion at the end of June, down NZ$2.6 billion month-on-month, and NZ$4.57 billion over two months.
The total value of on-balance sheet fixed term mortgages is now up NZ$5.88 billion in just two months.
The total of on-balance sheet mortgages rose NZ$652 million during June to NZ$173.8 billion. Mortgages with a value of NZ$237 million were recorded as off balance sheet, down NZ$9 million month-on-month.
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