by Paul McBeth
Increases in floating rate mortgages have now spread across the market, with a string of non-bank lenders announcing rates rises last week.
The latest increases are Sovereign, Metropolitan Life and NZ Home Loans, up from 6.25 per cent to 6.50 per cent from Monday (November 1). Other non-bank lenders to boost rates are BankDirect, Perpetual Trust and AXA New Zealand (formerly NM Lending).
That's left Cairns Lockie clinging to 5.85 per cent and other non-bank lenders ranging from 6.15 per cent to 6.45 per cent (click here for details).
Before this latest skirmish, floating rates had remained stable since late last year. However, Bank of New Zealand kicked off the increases a fortnight ago (lifting its variable rate from 6.50 per cent to 6.75 per cent) and all the main trading banks bar the National Bank were quick to follow suit.
The spate of floating rate changes has underscored the fact that it doesn't just take an increase in the Official Cash Rate to bump up this end of the market. And, with inflation on the climb (data released last Friday showed inflation of 1.3 per cent for the year to September), there's an even stronger chance the Reserve Bank will increase the OCR in a fortnight's time at its next official review.
However, BNZ chief economist Tony Alexander has long been expecting floating rates to rise two or three percentage points over the next year to 18 months (see earlier story). He was reported this weekend as saying floating rates would probably peak at nine per cent by early 2001, which is making the likes of two-year fixed rates around 7.85 per cent look even more attractive.