Kiwibank follows the rest

Kiwibank raised its two, three, four and five-year mortgage rates yesterday morning, bringing them into line with rate increases announced by other banks over the past week.

Spokesman Bruce Thompson said Kiwibank changed its mortgage rates before Mr Bollard's statement, and would consider a rate drop if its funding conditions changed.

"In light of Dr Bollard's comments, we are monitoring our rates very carefully," he said.

Meta Group mortgage broker Mark Jurgeleit said homeowners may not need to rush into fixed-rate mortgages.

"People have rushed for five-year rates at higher rates than they might end up. We may not have seen the end of low rates. I don't think people should over-react."

He said splitting mortgage rates could be the safest bet.

"You could fall back on the interest rate averaging theory - spreading your loan across a couple of rates. People looking at a two-year and a five-year loan can split their loan and hedge their bets.

"Most importantly, talk to someone who understands interest rates and who can apply your situation to the rate decision.

"It's not just picking a rate - you must understand your financial situation."