With the Reserve Bank tipped to hold its 8.25% interest-driving official cash rate until the end of the year - remaining the highest in the developed world - households refixing mortgages for short terms can expect to lose any of the tax benefits starting on October 1.
The shorter term six- to 12-month fixed mortgage rates of the ANZ, National Bank and Bank of New Zealand have all been raised, but with the exception of the BNZ raising its the key two-year rate from 9.295-9.39%, the ANZ and National bank left their two-year rates unchanged, according to interest.co.nz.
Long-term rates for the ANZ and National Bank of three, four and five years were cut to 9.35%.
BNZ chief economist Tony Alexander said before last week's budgets the markets were "overly optimistic" the Reserve Bank would ease up on its current rate because there was an "overreaction" to weak economic data being released at the time.
Shorter-term mortgage rates were up now because of the pre-budget expectation the Reserve Bank would ease in about June or July had now been shifted out to December, Mr Alexander said.
The Reserve Bank has been doggedly holding the interest rate to combat inflation, which is already beyond its outer target of 3%.
A recent Reserve Bank survey of business managers on inflation during the next two years showed their expectations were of 3.3% for the first year and 2.9% for the second.
Mr Alexander was picking a downward shift in the official cash rate by the Reserve Bank, acknowledging his prediction was outside general consensus, in that the Reserve Bank official cash rate would fall in about September, as opposed to closer to the end of the year.
Based on the key two-year fixed-term rates, Mr Alexander predicted the present rates around 9.4% would be down to below 8.5% by the end of the year and that by mid-2009 could fall to 7.5%.
However, present inflationary concerns around the world would not see rates fall to the 6.5% seen between 1999 and 2003.
"I don't believe that will happen through this cycle because we haven't seen these inflationary pressures for some time in New Zealand," he said.
