Procrastinate while you have the chance

Thursday, May 6th 2010, 3:51PM

The Reserve Bank of Australia raised its benchmark interest rate this week by 25 basis points to 4.5%, further widening the gap with New Zealand's Official Cash Rate (OCR) which is at a historically low level of 2.5%.

Meanwhile, Reserve Bank Governor Alan Bollard today stated that New Zealand's recovery from the Global Financial Crisis is entering a new, less fragile stage, which will allow monetary policy stimulus to be removed. Read here to see how the Reserve Bank will do so with Bollard's truck driver analogy.

We also look at the marked shift to floating and short-term rates by borrowers last year.

KPMG's 2009 Financial Institutions Performance Survey found that between 50% and 80% of borrowers preferred floating or six-month fixed rates, where there had previously been 80% of home loans in fixed terms. See other interesting findings from the survey here.

In Expert Views BNZ economist Tony Alexander says borrowers should procrastinate while they have the chance and stay floating.

There are no mortgage rate changes this week to advise of.

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