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Mortgages

Mortgage Rates Daily Commentary
Friday 3 July 2020  Add your comment
TSB makes big rate cuts; Bank profits drop 20%

This morning TSB has made some significant cuts to its home loan lineup. Its 18 month special falls by 30 basis points, and its six-month home loan drops by 40 basis points. See the latest rates here.

With record-low rates and Covid-19 to contend with, bank profits are taking a big hit this year. KPMG's latest report shows profits fell by 20% in the first quarter: [READ ON]

 

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Reserve Bank raises OCR to 5.25%

This time around, Reserve Bank governor Don Brash met concensus expectations and raised his official cash rate (OCR) from 5% to 5.25%, the second rise of the current tightening cycle.

Wednesday, April 17th 2002, 5:41PM

by Jenny Ruth

It remains to be seen how much banks will raise their floating mortgage rates, but borrowers can bet on them at least matching Brash’s move.

Brash says it was clear from the December quarter growth data that domestic demand has been growing strongly.and partial indicators for the March quarter point in the same direction.

"Retail spending has been very strong and house sales suggest a buoyant residential property market. Both business and consumer confidence continue to be high," he says.

While the world economy isn’t nearly as buoyant on average as the New Zealand economy but appears to be continuing a gradual recovery.

"All in all, and given the outlook for inflation, a further moderate adjustment in the OCR seems appropriate," Brash says.

Figures released yesterday showed a 0.6% rise in inflation in the March quarter, below the Reserve Bank’s 0.9% forecast, making the annual increase 2.6%. Nevertheless, the annual rate is expected to move near to or exceed Brash’s 3% target in the current quarter.

It’s likely the major mortgage lenders will at least match Brash’s latest move in the floating rates – after last month’s 25 basis point move, all five of the major home-lending banks raised their floating rates 50 basis points to 7.2%. The banks were playing catch up to the 90-day bank bill rate, from which they fund their floating mortgages and which had risen about 70 points since the last time they had adjusted their variable rates.

WestpacTrust treasury economist Nick Tuffley says while he doesn’t know what his bank will do to its lending rates, bank margins are still under considerable pressure.

"Because we’re still in the early part of the tightening cycle, there’s still a lot of tightening anticipated in very short order," Tuffley says.

Even when the central bank first moved last month, the wholesale market had already priced in today’s move. Now, the market has moved on to fully pricing in a further 50 basis point rise in the OCR when the next monetary policy statement is released on 15 May, Tuffley says.

"The banks have been wearing a much higher cost of funds and they haven’t fully passed it on." Even if they match today’s cut, they will still be behind the market.

On a brighter note, one to three-year fixed rate mortgages are unlikely to change much because the wholesale rates from which those mortgages are priced have only crept up a few points in the past month, Tuffley says.

« Home affordability declinesTime to fix or stick to floating rates? »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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