The week has seen many mortgage lenders increasing their four and five year fixed interest rates.
Many people have long term rate concerns and have sought certainty by fixing their mortgages which is causing fierce competition in the swap markets to cover lenders funding needs which in turn has driven up yields.
If an individual or business wants to fix a loan, another party needs to take the interest rate risk and based on recent economic events, they want a higher return. Kiwis are now seeing a positive yield curve – that is shorter term rates are lower than the longer dated rates and we have not seen this for sometime. There is a view in the market, that with all the recently announced Government spending occurring we may see inflationary pressures returning in the medium term which is not good for longer dated interest rates.
Speak to Thorners before doing anything relating to a home loan.