Thats a good question Dave, yes it is Dave.....and one that i really dont know the answer too! Suffice to say that long term rates have as you will have observed shot up and our friends at the Reserve Bank arent too happy about it!
What i do know is that the rates landscape has changed and most now will give more than a passing glance at the floating rate when making their decisions on loan structure. Approximately 85% of all loans in NZ are fixed whereas across the Tasman the reverse is true.
At the moment clients are considering a split in their structures, some short some medium and some long.....perhaps a little bit on floating. The net result of this is some protection from rolling off a rate onto a bigger one, still have the certainty of fixed rate payments but also some ability to pay off principal as and when you wish to.
As a structure it may not be the cure all for everyone but it does cover most of the bases, a bit like taking a box trifecta in a three horse race.....you wont win much but you will win!
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