Short end NZ interest rates rose substantially overnight. The 2-year swap rate rose to 0.23%, the highest close since June – well up from the zero rates seen just a couple of weeks ago. The large increase in short-end rates reduces the chance of substantial falls in mortgage rates, against the wishes of the RBNZ, which believes that adding further fuel to the housing market would be a good thing for the economy.

A good reminder that interest rates are unpredictable and that borrowing the maximum you can afford based on today’s interest rates is a risky game to play with your life savings.

John Kenel
Assured Property

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