Borrowers have a "wonderful" opportunity to work at reducing the principal on their home loans with floating rates 2.5% below the average for the last five years, according to BNZ chief economist Tony Alexander.
He says, in his Weekly Overview, that borrowers opting for floating rates currently are overwhelmingly getting the 5.99% Total Money rate, rather than the old standard variable at 6.49% and this is 2.5% below the five year average.
The bulk of people are fixing for two years or less though, he says. Yet despite all this, Alexander still favours the certainty of a three year fix.
"One suspects the well capitalised long running investors whom we believe are taking properties off the hands of the inexperienced ones now are likely to show a greater preference for a longer fixed rate given that their focus is on long term yield rather than holding to flick for a quick capital gain." he says.
He notes rates have been creeping up in the wholesale markets, but they haven't, yet, risen sufficiently to trigger increases to residential home loan rates.
