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Experts divided on this week's OCR announcement

Economists are divided over whether the Reserve Bank will raise its Official Cash Rate (OCR) this Thursday from 5%, but all are convinced it will do so soon.

Monday, December 1st 2003, 6:52AM

by Jenny Ruth

Macquarie Bank is among those who expect rises to start this week, pointing out that the Reserve Bank of Australia (RBA) and the Bank of England have already raised rates and that the wholesale interest rate markets have already anticipated a rise here.

"It is evident that little besides the New Zealand dollar is holding back growth and inflation. Business confidence, the labour market and the building industry continued to defy predictions that softer conditions were imminent," Macquarie says.

As well, commodity prices are improving, as is the outlook for growth for New Zealand’s major trading partners, auguring well for exports, it says.

ANZ Bank isn’t so sure. It says the RBA appears to have taken "an almost callous disregard" for the strength of the Australian dollar, but that our central bank is likely to give our strong currency a relatively high weighting in making its decision.

It likens the central bank’s situation is like "having one foot in boiling water and the other foot in freezing water." On the one hand, the strong currency is depressing export incomes and reducing imported inflation while on the other hand, the domestic economy, particularly the housing market, is very strong.

It notes Reserve Bank figures show that bank mortgage lending rose 1.6% in October, the 14th consecutive monthly increase, bringing the annual increase to 16.4%.

Soaring mortgage lending was one factor behind the RBA’s decision to hike rates. "Interestingly though, Reserve Bank governor Alan Bollard told the New Zealand Parliament’s finance and expenditure select committee that household debt was not a problem for the stability of the financial system," ANZ says.

ASB Bank also expects the Reserve Bank to play a waiting game this week, noting that the New Zealand dollar is trading at six-year highs.

"We would not be surprised by a December rate hike but thing the odds favour the RBNZ holding off until January."

By then, the central bank will have a swag of new data including the September quarter growth and balance of payments data, the December quarter consumer price index and the latest business opinion survey.

Deutsche Bank, previously among the more dovish economists, also expects the OCR to remain unchanged this week but warns that the central bank will "deliver a firm message, emphasising its increasing concern about the continued strength of the housing market and upside risks to the inflation outlook."

« Mixed news on housing market frontRates rises slowed in November »

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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 7.79 7.39 7.25
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 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
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
Lender Flt 1yr 2yr 3yr
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 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

Last updated: 28 May 2024 11:21am

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