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Housing in Auckland - Source: ONE News -
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ABS chief economist Nick Tuffley believes floating interest rates will stay relatively low until the Reserve Bank raises the official cash rate.
Reserve Bank governor Alan Bollard on Thursday kept the 2.5% official cash rate on hold and said it was not likely to increase until "around the middle of 2010".
Tuffley says the floating rate will remain the lowest for the longest, but once the cash rate is lifted, floating rates will rise swiftly.
"There is a trade-off, but the way that the long-term rates are sitting at the moment you're probably not doing better by fixing," he says.
The upside of fixed rates, he says, are that they will not be as volatile over the next year or so.
Along with floating rates, Tuffley says six-month and one-year
fixed rates could rise the most in the short term, more so than
long term fixed rates which have already moved to quite high
levels.
