colinrealestate

With the OCR rate increase, it pays to remember two vitally important things as you contemplate whether to switch to a fixed rate and when to do it.

First, every policy tightening period is a suck-it-and-see exercise.
You never know for certain how borrowers, savers, businesses, and the exchange rate will react to rising interest rates.

Last time the RB started raising rates just over a decade ago, the common view was that the cash rate would rise from 5% to 6.25%. I picked 7.25%. The actual peak was 8.25%.
The second important point to note about this rate tightening period is that
no-one has an economic model which tells us how economies move after almost falling into GFC in 2008.

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