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For those that have recently become homeowners, it will be important that house prices don’t drop. Many people have purchased using a low deposit and if house values drop, these purchasers could find themselves in an adverse equity position.

ASB is the latest bank to drop their 4 and 5 year mortgage rates below 3%, joining BNZ and Westpac at 2.99% and it won't be long before the other banks follow suit.

In my recent survey, 96% of Mortgage Advisors said that people are favouring the one-year term when fixing their mortgage. The reason for doing so is fairly clear – it is the cheapest rate on offer.

You might think that as an economist I tell people what I think is going to happen. There are certainly elements of that, and generally that is what people look for. But the way to do this is remind people about the long-term underlying forces in play.