Still low floating mortgage rates could be used by borrowers to pay down more debt before increasing hedging later next year, BNZ currency strategist Kimberly Martin says.
The Reserve Bank held its official cash rate at 3.5% last month and the BNZ expected the central bank to hold off increasing rates until late next year.
''We see the OCR moving higher to a 4.25% peak in early 2016. This projection suggests floating rates will be stable - at still very low levels by historic standards - in coming months.''
The greater immediate opportunities were in longer-dated fixed rates, which had fallen sharply this year, narrowing the gap between longer-dated fixed rates and floating rates.
''This reduces the upfront cost of fixing over a longer period.''
Kiwibank yesterday cut its longer-dated home loans: the five-year to 5.99%, three-year rate to 6.09% and four-year rate to 6.59%.
