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.

It's been a bit of a 'yawn' yet again in the home loan interest rate market over the last week with no notable changes to rates and it's therefore very difficult to come up with anything new to say!

In NZ and on the interest rate front we are only a couple of weeks away from the next OCR (Official Cash Rate) review on April 29. The consensus is that there will be no change and, in fact, that date sits outside of the Reserve Bank's statement that it expects to start increasing rates around the middle of the year.

After the 29th, the next reviews are due on June 10, July 29 and September 16. Economists vary in their opinions as to which date the increasing cycle will start on, with one of the 'majors' still suggesting June 10, with others preferring July 29 and out as far as September 16 - so who knows?!

Since the start of 2010, the housing market has generally been in the doldrums and both activity and prices have eased. Added to this has been the uncertainty surrounding the likely changes to the tax treatment of investment properties and with the Budget not until May 20, the activity in that market is likely to remain subdued. This hiatus has fed through to consumer spending which is also very subdued as people feel less 'wealthy' and more uncertain about what the future holds for them.

At the risk of sounding like a broken record, I still favour the strategy of taking advantage of the low variable rate at present, but with a view to switching to a two year rate over the next few months once it looks like the economic recovery in NZ is really bedded in.

The time to make the move to a fixed rate does not appear to be right now as there is unlikely to be a change to the OCR on April 29. That then brings June 10 into play as the next key date and we will really need to keep a close eye on the economic data to get an idea of whether the Reserve Bank will make a move on that date. Personally, I think the first increase will be delayed until July 29, but I could be wrong!

The problem we have is that the financial markets will start anticipating when the OCR will start increasing and the fixed rates will probably increase in advance of the OCR review date, so it will be important not to be too greedy and at some stage borrowers will need to make the trade off of low rates for certainty, but at a higher cost.