This graph shows that the value of mortgages on floating rates continues to skyrocket. 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.
Mortgage brokers believe the two-year rate is of better value than floating with a difference of less than 0.5% between the two rates. This means it would only take two or three 0.25% increases next year for the two-year rate to have excellent value.
However with the Reserve Bank not predicted to lift rates till next March, borrowers appear comfortable staying floating and benefiting from low rates for a little longer.
