The Reserve Bank may yet consider postponing the beginning of it monetary tightening policy as mortgage holders swing in increasing numbers to floating their loans.
About 56% of mortgages, by value at the end of July, were on a floating rate, with a further 26% of mortgages due to refinance from a fixed rate inside the next 12 months, according to the Reserve Bank.
That meant 83% of mortgages, by value, are floating or near floating and that less than 5% are fixed beyond two years; the lowest proportion during the past 13 years.
At present, the interest driving official cash rate (OCR) is at a historic low of 2.5%, and analysts are expecting Governor Alan Bollard to begin raising the rate by the end of the year or in January, to counter commodity-driven inflation.
However, Craigs Investment Partners broker Peter McIntyre said with more mortgage holders shifting to floating rates, when the Reserve Bank moved rates it would hit more households immediately, as opposed to when previously fixed rates came up for renewal.
"This will allow the Reserve Bank to hold the rate lower for longer; because when rates do go up it will have a bigger impact," he said yesterday.
The Reserve Bank's next monetary policy statement is due on September 15, followed by an official cash rate announcement on October 27.
Mr McIntyre said some analysts were now predicting the OCR might be held at 2.5%, having been set there in March following Christchurch's February quake, until the second quarter of next year.
"The extent of floating rates means the bank should have a longer lead-in time," he said.
The average rate paid on all mortgages is at present 6.21%, above the average floating rate of 5.73%. The average new customer one-year fixed rate is 6%, which is below bank rates offered on fixed mortgages for two-years or more.
