Should you be considering a longer term fixed rate? At some time point in the rate cycle, you try and pick the low point. It is not always easy to get the timing right, when switching from short term rates to longer term ones. As often the market preempts this and the longer term rates start to look different.
What we’ve seen for a long time, is that people like to fix for one year and enjoy the lowest rate.
And then the thing is though with that strategy is when rates start to move up, you turn around and go, you know what? I wouldn’t mind a longer-term rate and sometimes they have moved already.
What we just saw lately, 18th of August, the Reserve Bank comes out and they say that OCR stays the same. One of the banks had moved a little bit ahead and moved all its rates up. Since then we have seen a lot of moves up.
So this time around, we wonder if those moves will be stickier. Is it time to really consider that three year fixed term or longer?
My advice on this is always kind of been the same, really. If you’ve got a bit of lending and you wanted some security, you know, you can always just break it up, fix some long, fix some short. Talk to a nice financial adviser, kind of like the ones that work for us.
