Or there is a sliding scale of fees over a five-year basis then no fee. None of the fees which are charged are as prohibitively expensive as here. Why are such products not offered here? – Bruce<\/p>\n
A: Where\u2019s the fun in fixing for 30 years? What would Kiwis talk about at barbecues and worry about at night if we didn\u2019t have a mortgage rate to refix? Our mental health? Relationships? Perhaps we\u2019d pay more attention to investing and saving.<\/p>\n
Seriously though, the New Zealand obsession with short-term fixed mortgage rates is something of a cultural quirk. I suspect we all quite enjoy it in a masochistic way.<\/p>\n
One technical reason for the inability of local lenders to provide longer-term fixed mortgages is that we just don\u2019t have the depth of market in this country to fund them.<\/p>\n
In other words, there just aren\u2019t enough large, long-term investors seeking fixed investment returns across that timeframe. Banks have also made the point that there isn\u2019t much demand here for longer terms \u2013 although that seems a bit self-fulfilling. <\/p>\n
We\u2019re very much conditioned to go for six-month, 12-month or two-year rates because that\u2019s where the banks seem most competitive and it\u2019s usually where the best bargains are.<\/p>\n
Some people may recall that local banks did offer seven-year fixed rate terms a few years ago \u2013 but they weren\u2019t popular. Clearly, we just aren\u2019t keen to be locked in for the long haul despite the financial security that would provide.<\/p>\n
We don\u2019t seem to be quite as bold as the Aussies though, either.<\/p>\n
In Australia, the bulk of mortgage holders stay on floating rates. They prefer to take their chances on the ups and downs of the market in that optimistic Aussie way.<\/p>\n
Of course, floating rates, relative to fixed, have historically been cheaper there than here.<\/p>\n
Again with the self-fulfilling prophecy … it\u2019s the nature of markets that the best bargains land where the bulk of the competition is focused.<\/p>\n
Another benefit for the Australian economy is that the interest rate moves of the Reserve Bank of Australia have a much faster impact.<\/p>\n
We Kiwis are hooked on short- and mid-term fixed rates and are kind of stuck with them. But some more choices would be nice. A market opportunity for a new player perhaps? Don\u2019t hold your breath!<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. <\/p>\n
He joined the Herald in 2003. To sign up to his weekly newsletter, click on your user profile at nzherald.co.nz<\/a> and select \u201cMy newsletters\u201d. For a step-by-step guide, click here<\/a>. <\/p>\n