Interest Rates increase

We have in the last few days seen some of the major banks increase their fixed home loan rates sighting an increase in the cost of wholesale rates as the reason. In our opinion these increases are unjustified as margins remain good. Going forward many borrowers may choose now to stay on a discounted floating rate or fix short term i.e. 6-12 months to minimise their repayments. To fix long now will see borrowers automatically paying more but they then have certainty. Much of the reason interest rates are increasing is due to the supposed improvement of economic conditions overseas. These improvements could just as easily be undone meaning that interest rates here in NZ could fall again. Borrowers need to look at their own financial circumstances and decide whether fixing short or long or remaining floating is the best strategy.