Fixed rates now on the rise
Economists say homeowners have officially missed the boat on locking in cheap fixed mortgage rates.
This morning the Reserve Bank kept the official cash rate on hold at its historic low of 2.5 per cent.
The central bank's decision was widely expected, but the schedule of estimated rate rises from next year caught the market on the hop.
Westpac chief economist Dominick Stephens said the statement suggested hikes would begin in April next year and move upwards about once every quarter.
He said he was now indifferent between choosing a floating or fixed mortgage rate.
"In the past ... I said if you want to fix, you've really got to get in before the hiking cycle becomes obvious to everyone," Stephens said.
"I think that opportunity now has been lost.
"Now I'd suggest the choice is one of personal preference and personal circumstance, rather than trying to beat the market."
ASB, ANZ, BNZ, HSBC, Kiwibank and Westpac have all lifted their longer-term mortgage rates over the past three weeks, blaming the rises on the cost of funding.
The rates on offer have all moved up by about one-third to one-half a percentage point.
Wholesale "swap rates", or fixed contracts between lenders, plunged to historic lows just over a year ago, but have recovered to reach their highest point since mid-2011.
ANZ chief economist Cameron Bagrie said there was still room for fixed rates to move higher.
"It depends how aggressively the market decides to price in the Reserve Bank's view," he said, adding the implied schedule of rate hikes had caught the market on the hop, but the trajectory was not overly aggressive.
"We've seen the lows for interest rates, but I don't think it necessarily follows that we're going to see highs."
Bagrie agreed with Stephens that the choice between fixed or floating would now come down to personal circumstances.
"It's a case-by-case basis, because everyone's got different preferences in regards to how they weigh certainty versus potential cashflow benefits," he said.
Fixed rates are seen to offer some certainty and insurance against rises, while floating offers more flexible repayment options.