In the BNZ Weekly Overview Alexander says that in a year's time talk will be about a global recovery, the labour market being soon to improve and of house prices rising. However, he warns that it sees scope for the Reserve Bank (RBNZ) to hike the cash rate by over 3% to nearly 6% by the end of 2010.
"The resulting jump in floating rates could catch out a whole new cohort of "investors"," he says.
Hedging against the risk of rates rising over the next two to three years remains the best borrowing option currently, Alexander says. He is sticking fast to his preference of a three year fix at 6.99% as the most favourable choice for borrowers at present.
"But most people don't think that far ahead and will currently be assuming low rates will continue for a long time because the RB have indicated they will keep their cash rate low until some point late in 2010. Maybe," he says.
ANZ also refuses to alter its favoured borrowing strategy, albeit different to BNZ's.
In its July Property Focus it says: "We maintain our bias towards short-term rates and at this juncture the six month rate in particular."
It acknowledges the housing market pick-up and speculation of a housing shortage, but points to the rising unemployment rate; the fragile global scene; the lower dairy payouts having yet to hit rural areas; its belief that there is no housing shortage; as well as the political pressure on the financial services industry, as justification for its stance.
