The Reserve Bank has given a clear indication today that interest rates will not be going up for longer, raising the question, should mortgage holders float or fix?
Bollard, who steps down as governor later this month, pointed to the fact that short-term interests were expected to stay flat for a year.
This was taken as a clear signal that the official cash rate (OCR) is expected to go nowhere until late next year, or even early 2014.
In recent months thousands of kiwis have opted to fix their mortgages, mainly for 1-2 years, to take advantage of special rates and increase certainty over their disposable income.
The proportion of floating rate mortgages hit an all time high of 63 per cent in June, but has fallen to 59 per cent because of the rush to fix.
So has the balance changed to support floating?
"Not really," said Dominick Stephens, chief economist at Westpac.
"Fixed mortgage rates are currently below floating rates, so the only way you can lose by fixing is if the Reserve Bank reduces the OCR, and I think the Reserve Bank, by omission, has reiterated that it is not currently intending to do that."
Despite the Reserve Bank's statement, Westpac's official position is that the OCR will start increasing from June next year, although Stephens admitted that this was "always" under review.
Of real interest to the market is what Bollard's replacement, Graeme Wheeler, will do once he has control of interest rates.
While there was every chance he will take a substantially different view of the world than his predecessor, Stephens dismissed the idea that on the face of it, Wheeler was more likely to cut interest rates.
Bollard has been viewed by the market as "at the more dovish end on the spectrum of economists", in a world where doves are inclined to lower interest rates and hawks are more prepared to raise them.
Despite the move to fix interest rates, Kiwis are now paying, on average, an interest rate of 5.84 per cent on their mortgages, the lowest in decades, with the rate expected to continue falling. While the housing market was not yet showing signs of overheating - outside Auckland at least - this may change soon.
"With these low interest rates he'll be facing a steadily warming, bordering on hot housing market by early 2013," Stephens said.
"It's anyone's guess how he'll respond to that."
So despite Bollard's promises, interest rates might not stay unchanged for as long as he expects.
- © Fairfax NZ News