Mortgages may have already peaked at the current level, the home loan expert says
Mortgages may have already peaked at the current level of between 5% and 6%, according to a home loan expert.
ANZ Bank recently slashed the rate on its two-year fixed home loan special from 5.8% to 5.45%, following the cash rate hike to a six-year high of 2% in May, with the Reserve Bank forecasting further rises to combat inflation.
John Bolton, Squirrel Mortgages chief executive, said markets were expecting rates to not get as high as they predicted two or three months ago due to fears of a recession.
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“All this bad news that’s been flowing into our economy over the last sort of month or so has got reflected in future interest rates,” Bolton told RNZ.
When asked if the central bank would take the foot off the throttle, Bolton said fixed rates were already pricing in increases in the OCR.
“It is going to keep going up and the expectation was it was going to go up over 4% and it was going to get there quite quickly, but what's happening is the OCR is still going to increase, but it’s going to increase slower and probably won’t get quite as high,” he said.
For home loan borrowers, those longer-term rates are sitting around 5.5% to 6% and that’s around where rates will peak, Bolton told RNZ.
