KEY POINTS:
Analysts comment on the Reserve Bank's decision to hold interest rates at 7.25 per cent:
Mortgages
Willliam Cairns of mortgage broking firm Cairns Lockie said people should look to fix for one or two years if they are taking out a mortgage or re-fixing.
"Rates have
pretty much peaked," he said.
"My gut feeling is there won't be any more rate increases, but you can never say never."
He said this morning's decision to hold rates was sensible.
"I just think we're all relieved and common sense prevails.
"We have to realise that New Zealand does have the highest mortgage rates in the western world," he said.
"Just putting up interest rates doesn't work as well as it once did and all you're doing is hurting those that have just got into their house, or with high mortgages, or business people borrowing on their houses to fund their business."
David Chaston, publisher of market analysis website interest.co.nz said those fixing mortgages should look at a period of around two years unless they are likely to be settled in their home, in which case he suggested a term of two plus years.
Your fixed-interest investments:
David Chaston said people with money in fixed-interest would continue to see rising returns if the economy remains strong.
"All bets are off if the economy tanks!" he added.
"I think returns are going to rise based on the rising wholesale cost of money and based on the international benchmarks that are rising.
"The Brits, the Europeans, the Americans and even today the Norwegians, are all raising official rates. The Japanese are almost certainly going to be raising them very soon, so New Zealand will not be insulated from that."
Chaston said rising overseas rates would flow through to New Zealand.
"There is an awful lot of cash around. Not only is there a lot of Australian cash around, which we all know about, but there's also an awful lot of New Zealand cash around."
"If I'm right and rates are going to be rising, that means demand for the cash is going to be rising and that means the expectation is the domestic economy is going to continue to grown strongly, irrespective of what the Reserve Bank does," he said.
"The smart money's on rising fixed interest rates. It may not be rising as fast as equities, it may not be rising as property in some property sectors."
