Brian Berry - Financial Advisor
	Straight forward, quality financial advice - so you can get on with the fun stuff in life. Click to view Rothbury's website.

Yes, it appears that it is time to sit tight for the next two and possibly three months and take advantage of the low variable interest rates. When I say ‘it appears', I need to reinforce that my opinion is based on the economic news that we have to hand at the moment – basically that the economic recovery in NZ is a bit slower than it looked like it was going to be, the Eurozone is suffering to a greater degree and the recovery in the USA is certainly rocky, to say the least.

Add to that, the fact that the recovery in Australia is perhaps not quite as robust as expected (they have therefore paused their interest rate hiking) and quite a bit of the pressure has been taken off the Reserve Bank here to start the firming cycle via OCR (Official Cash Rate) increases.

The financial markets have pushed out the start in the firming cycle till the June 10 Review at the earliest and some pundits are suggesting that even a July 29 start is not a given.

If that is the case, then interest rates should stay pretty well where they are for the next two months at least. With the variable rate being so low, it makes sense to stay ‘low' for the next couple of months and then either to ride out the upward leg of the interest rate cycle or to consider fixing, probably for two years maximum, just before (probably a month before) the OCR looks like it may start increasing – positive economic news should give a fore-warning of this.

For those who want to fix at some stage then getting the timing right is the difficult part as the fixed rates will increase in advance of the variable rate.

Some borrowers like to hedge their bets and a mix of rates may be an option for those people, rather than going fully one way or the other.