In agreement with others, I would say this term is at the very least insensitive now, though it doesn't seem to be as inflammatory as, say, "coloured" in the States. (I'm not from the States, but have seen reactions to its use in the media, such as Lindsay Lohan's use of it to describe Obama in 2012).
There are many terms which were at some time simply descriptive (half-caste simply making a statement about caste; a while back retarded simply described a condition), but as societies evolve and values change, it can become unacceptable to identify people according to outdated classifications.
In my father's country, I would be called afakasi, which is a Samoan loan-word which of course stands for half-caste. It's a fluid term, its offensiveness depending on who is using it or why. I might describe myself to someone as afakasi to point out that I am part Samoan, part something else. In Samoa, some pure bred Samoans will call someone afakasi in a pejorative sense to put them down.
While not the most offensive of racial terms, it certainly won't hurt us for the term to one day slip into the "totally unnecessary and unacceptable" folder.