Thousands of New Zealanders chasing a cut in their home loan interest rate have caused a log jam in the banking system, which is groaning under the weight of homeowners battling for the best deal.
One bank had 2000 inquiries last week about rates and was struggling to cope, a mortgage broker told the Weekend Herald.
"It's clogged up the banking system and people are waiting for decisions."
Mortgage rates have hit rock bottom and banks are going to extreme lengths to get borrowers to switch lenders.
The competition is so intense that a man who visited an Auckland bank yesterday to change foreign currency was asked if he wanted a mortgage.
Some banks have offered cash deals to win new customers.
Many homeowners have been haggling to get at least half a per cent off the banks' advertised rates.
But some banking economists are warning that rates will rise - albeit slowly.
Bernard Hickey, who runs the interest.co.nz site, said bank managers were once people to be feared, but now they were sitting on a pile of cash and were desperate to lend.
Yesterday, Mr Hickey said the big questions for homeowners were whether to get a fixed mortgage or a floating one and when.
It was a decision that could save - or cost - thousands of dollars over the next couple of years.
More than 60 per cent of mortgage lending was now on floating rates.
This is just below a record high and a reversal of the pre-2008 ratio.
Mr Hickey's website is running a poll on whether to opt for a fixed-rate or a floating mortgage, or to sit on the fence.
"I'm a floater because I think the interest rate has potential to go even lower because the global economy is slowing down," he said.
The weight of a painful rebuilding of the European economy was pushing down on interest rates.
The Reserve Bank would probably keep the official cash rate low for longer than some economists were predicting.
Even with a slow rise, bank customers with enough equity and good repayment records could push their banks for better deals of around 5 per cent to 5.2 per cent.
Loan Market broker Bruce Patten said about half of his customers were moving to fix a rate to have certainty over their costs, while others were happy to keep riding the floating rate.
"We say if you can afford to let it float, stay floating."
Mr Patten said that after months of competing for customers, banks were starting to pull back as their profit margins on lending shrank.
This week, ASB raised its advertised one-year rate 20 points to 5.45 per cent and its three-year interest rate by 15 points to 5.9 per cent.
ASB chief economist Nick Tuffley said there was a growing trend for borrowers to opt for a fixed rate.
A floating rate was expected to rise in response to the official cash rate going up gradually from 2 per cent to 4 per cent by mid-2014.
Fixed rates could well turn out to be slightly cheaper over that period.
But lenders would give away any chance of benefiting if the overseas crisis went on for longer than expected and kept rates down.
If the cash rate were held for longer, a floating rate would be the lesser and people would minimise their debt-servicing charges.
Westpac chief economist Dominick Stephens said fixing would probably be better than floating because banks were paying more for money and the New Zealand economic outlook had improved.
He said a lot of people were waiting for the point where rates were at their lowest.
"Our feeling is that the optimal moment is closest enough and that on a balance-of-risk basis it's better to fix now."
Roost Mortgage Brokers spokeswoman Colleen Dennehy said people must be clear about what type of interest rate best suited their needs.
"Fixing might make sense if you're paying down other debt; floating might be the way to go if you want more flexibility, for example, so you can make extra payments."