Kiwibank has lifted its one-year capped variable rate by 25 basis points to 6.75% today. Capped rate loans work the same way as standard variable rate loans - the rate floats up and down with the market. However, they have a pre-set cap that the interest rate can't rise above. Westpac also offer a one-year capped variable rate of 6.95%.
The value of mortgages on floating rates is continuing to skyrocket despite attractive two-year rates. In September there was $67 billion of mortgage debt on floating, compared to $37 billion a year ago - an 81% increase. Since September 2008 there has been a 220% increase and this is because of the positive sloping interest rate curve. See the graph here in Latest Trends.
