Lenders cut fixed mortgage rates
The latest interest drops for fixed mortgages could offer some good bargains to homeowners, who are still being cautioned not to take low rates for granted.
Monday, April 19th 1999, 12:00AM
by Paul McBeth
The latest interest drops for fixed mortgages could provide some good bargains for homeowners, who are still being cautioned not to take low rates for granted.
AMP/Ergo has announced "New Zealand's lowest three year lending rate in 30 years", cutting its three year fixed mortgages from 6.95% to 6.75%. Managing director Robyn Clubb says that continued falls in long-term wholesale rates are responsible for the move.
Meanwhile, mortgage banker Cairns Lockie has cut its two-year rates from 6.85% to 6.75% and three-year rates from 7.20% to 7.05%.
However, REINZ president Max Oliver says the possibility of the Reserve Bank intervening to control interest rates is still the biggest threat to lower mortgage rates. Writing in the institute's latest monthly review, Oliver says that the Bank's new official cash rate could easily be used as a 'blunt instrument' by the bank in coming months.
He says it still leaves the RB with "a highly effective method of manipulating interest rates to serve the wider low inflation objective".
"The message for homeowners is don't bank on low rates for another few months yet."
The RB introduced its official cash rate, or OCR, on March 17 as its latest focus for monetary policy, taking the limelight off its Monetary Conditions Index (which factors in the exchange rate as well as interest rates). The OCR, which stands for the cheapest money banks can buy, will be reviewed approximately every six weeks: its first review is this Wednesday (April 21).