Floating mortgage rates are strongly expected to reach 6% in 2011, according to local prediction market iPredict.

The Victoria University-owned market indicates there is an 87% probability that average floating-rate mortgages will reach 6% by the end of this year. This number is up from an 84% probability last week.

The probability that they will reach 6.5% in 2011 has also risen since last week, from 20 to 25%.

The market also expects Reserve Bank Governor Alan Bollard to increase the official cash rate (OCR) earlier and more frequently than previously indicated.

But while this is expected to affect mortgage rates, other economic indicators have broadly remained the same.

The OCR is predicted to remain at 2.50% until September when there will be an increase to 2.75%. 

It will remain at 2.75% through to December 2011, when it is expected to rise to 3 %, rising to 3.25% in March 2012, and then to 3.50% in April 2012.