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Mortgages

Mortgage Rates Daily Commentary
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Distance between inflation and RBNZ’s target narrows; SBS rates change

All eyes this week will be on the Consumer Price Index data in the wake of the Reserve Bank’s slight change in mood on when interest rates will come down. [READ ON]

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Mixed outlook for mortgage rates follows latest Reserve Bank and Feder

The Reserve Bank has kept its Official Cash Rate at 4.5 per cent. That's good news for floating rates, but fixed rates could be pushed up by US moveses

Wednesday, May 19th 1999, 12:00AM

by Paul McBeth

The Reserve Bank has confirmed today that its Official Cash Rate remains unchanged at 4.5 per cent.
While that may be good news for floating mortgage rates, fixed rates are more likely to be affected by what's happening in the US and there it's a different story. US central bank the Federal Reserve has just come out with a formal signal that it's prepared to lift interest rates to curb inflation, after holding an officially neutral stance on rates since last November.
Why that's important to New Zealand homeowners is that changes in US long-term interest rates influence our own long-term rates and therefore the cost of funding fixed rate loans.
Bankers Trust executive vice president Roger Kerr says the US markets had been expecting the Federal Reserve's move and had already started to push up rates, with New Zealand 10-year bond rates in turn rising from 5.20 per cent at Christmas to around 6.20 per cent. He's tipping that will continue up to 7 per cent in coming months.
Kerr says this creates an 'interesting situation' for mortgage rates.
"While the financial markets look to ten-year interest rates, the three to five year bond market is more important for people with mortgages and there are two forces pulling on those. The ten year rates are being pulled by the US market and then, at the short-term end, the 90-day wholesale interest rates are now effectively regulated by the Reserve Bank."
He says the US move is likely to mean increases for fixed rate mortgages. That's already started to happen with BankDirect, for one, announcing a series of rises last Friday.
For floating mortgage rates, the stable OCR should keep things steady in the meantime. The catch is that, if and when it is increased, floating rates could go up with a jolt.
Kerr's concerned that the Reserve Bank may be too positive in its outlook.
"The great danger is that, if the RB has got it wrong - if towards the end of this year it's proved that it was too relaxed in May and inflation is rising - there could be a really dramatic rise in floating rates," he says.
"So it's a tradeoff for mortgage holders. They can fund cheaper in the meantime (through floating mortgages) as fixed rates move higher. But they should be aware that floating rates could move higher at the end of the year."
The Reserve Bank certainly seems gung ho for the time being, with Governor Don Brash commenting today that a steady economic recovery was now well under way and inflationary pressures appeared to be "well in check". The announcement of the OCR review this morning was made in tandem with the release of the Bank's May 1999 Monetary Policy Statement.
Brash also noted that world markets appeared to be anticipating a robust global recovery and, in particular, a significant rebound in commodity prices.
"This appears to have driven the substantial appreciation in the New Zealand and Australian currencies in recent months. This rise in the exchange rate means monetary conditions have tightened more than we projected back in March."
However, Brash said the Reserve Bank's view was that global economic fundamentals weren't as strong as this suggested and the exchange rate rise could be temporary, so there was no immediate need to alter the OCR.

Paul is a staff writer for Good Returns based in Wellington.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 15 July 2024 11:47am

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