It says that with gross domestic product stabilising earlier than expected the Reserve Bank is likely to start tightening earlier too.
"We currently expect the first hike to be in June, although the market anticipates the possibility of an even earlier move, with 10 basis points already priced in for the January meeting," it says.
This follows the release of data last week revealing that a 0.8% decline in GDP was recorded in the second quarter of this year, an improvement from the previous quarter's 1% dip, edging NZ out of recession.
ASB describes the variety of local economic good news stories that came out last week as providing glimmers of hope that we are at the end of a "long, cold winter" economically.
The BNZ Capital Markets Outlook also highlighted the good news stories out last week, saying NZ interest rates saw a sizable lift over the previous week, with yields pushed higher on the back of stronger current account data; the revised milk solids pay out forecast; as well as the GDP data confirming the recession is behind us.
The ANZ Market Focus notes the market's speed in cementing in rate hikes from early next year, on the back of the better than expected data.
"We still see rates remaining low for some time, despite the economy exiting from recession earlier," it says.
As a result it is sticking to its favoured borrowing strategy of floating.
"Indeed, with a steep yield curve set to be a regular feature in NZ, paying a premium for certainty is set to become the norm. We still see the market pricing in rate hikes to early and continue to favour options for hedging purposes," it says.
The Westpac Weekly Commentary states that the last couple of months have seen borrowers gradually moving out of floating rates to short-term fixed deals, which it says are the most favourable on offer - and are likely to remain so for some time.
"But they're unlikely to remain at current levels once we see a more substantial shift by borrowers into these terms - in the same way that the extremely low long-term rates available prior to March didn't last for long once borrowers actually started taking them up."
As a result it is suggesting borrowers should "seriously consider" fixing now.
