|
|
Article: Making sense of interest rates: what is the best interest rate option--fixed or floating? Tony Thomas explains the differences.(on accounts)
- Article from:
- NZ Business
- Article date:
- March 1, 2006
- Author:
CopyrightCOPYRIGHT 2006 Adrenalin Publishing Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
One of the questions I am frequently asked by clients is whether they should choose the fixed or floating interest rate option on their mortgage or business loan.
[ILLUSTRATION OMITTED]
The answer depends on the following factors.
* Whether interest rates are more likely to go up or down.
* The fixed and floating interest rates available at the time.
* The client's particular circumstances.
Mortgage interest rates are based on the official cash rate--the interest rate set by the Reserve Bank to maintain price stability. It influences short term interest rates which in turn has an impact on economic activity and ...