Cash-strapped homeowners will see some relief this year, with experts predicting the Reserve Bank will keep official interest rates low until at least September.


However, some experts say even that may be too early.


After two rises of 0.25 percentage points in June and July, the Reserve Bank has held the official cash rate steady at 3 per cent, as economic growth stalled.


Economists still expect a recovery this year, but there is a growing view that Reserve Bank governor Alan Bollard will leave rates on hold for another eight months.


The good news is coupled with predictions the stalled housing market will get a boost because of a property shortage.


At present, banks are charging between 6.15 per cent and 6.74 per cent for floating rates. A 0.25 per cent increase to mortgage interest rates means an extra cost of $250 a year for homeowners with a $100,000 mortgage, or $750 for those with a loan of $300,000.


With house prices remaining flat, unemployment above average and low longer-term inflation pressures, economists have been gradually pushing back when they expect the Reserve Bank to raise the official cash rate. It is well below the 5.9 per cent average of the past decade.


Economists at ASB and Deutsche Bank have moved their rate-rise predictions from June to September, and Westpac chief economist Brendon O'Donovan said even that may be too soon.


"It's been an environment where shocks seem to be the norm. If that continues, then the Reserve Bank's view will be fluid. At the moment it's looking like September but that's probably at the earliest."


Bank of New Zealand chief economist Tony Alexander said BNZ was still predicting a rise in July, but there was a growing shift towards a later date.



Mr Alexander said only a small percentage of mortgage holders would be lucky enough to pick the optimal time to fix.


"Most won't, because one thing that causes it to go up is everyone taking the fixed option. So, for example, in March 2009, people switched to fixed all at once and boom, fixed went up. Most will not fix at the current low rates."


Mr Alexander said the property market was likely to become more competitive because not enough houses were being built.


"About 16,000 a year when nationally we need about 23,000."


That, combined with a predicted shortage of builders because of the rebuilding needed in Christchurch and Queensland, would give the housing market a boost.


"At the moment, it's a buyer's market, but it will start turning around later this year."




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