New Zealand Mortgage Strategy Update

Time to have a look at our general views on mortgage structure. It's not easy for property owners to refix their mortgage with most rates available being just under 7%.

Although inflation in NZ and around the world has come down, it is still stubbornly high and above target. The rate of price increases are not as high as it was, but increases are continuing.

We see factors that are putting downward pressure on interest rates such as New Zealand wage growth easing and unemployment increasing, but there is upward pressure also such as NZ business prices being high, and in the US there is sticky inflation, and expected US interest rate cuts have not materialised as expected in 2024.

This all adds up to us having low conviction view on how long clients should be fixing their mortgage for. Rates could go up or down.

When we have low conviction, we recommend that clients hedge their bets, which means to put some of their mortgae on the 1 year fix, part on the 2 year, and 3 year fixed also.

It's hard to come to a different conclusion without fear of time and events making a mockery of our predictions.