tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, December 3rd, 6:36PM

Mortgages

Mortgage Rates Daily Commentary
Tuesday 3 December 2024  Add your comment
Hard times not easing much for mortgage borrowers; BNZ Fixed housing rate change effective today

Mortgage arrears have risen for the third consecutive month and are higher than last year's levels, according to figures from the credit bureau Centrix. [READ ON]

BNZ is updating their Fixed Housing rates today [See here]

rss
Latest Headlines

Anxiety levels to be tested

ASB Bank economist Anthony Byett gives his views on the best home loan rate deal in wake of the Reserve Banks' Monetary Policy Statement last week.

Monday, December 8th 2003, 7:54AM
The Reserve Bank has just delivered its "no change" policy. The Official Cash Rate remains at 5.00%, at least for now. It is apparent that the RBNZ is exercising patience. It intends to use the full breath of the medium term and average rate nature of the inflation target.

The RBNZ is also very cognisant of a rising NZ dollar and the risks that the NZ dollar could appreciate considerably more, mainly because the NZ dollar may get swept up in the weakening US dollar frenzy - "... the US dollar which seems to be on a trend decline with some way to go", says the RBNZ.

There is also an acceptance, though, that there is very little that can be done to prevent further New Zealand dollar appreciation should the United States dollar depreciate. The more important focus for the monetary authority is to restrict the NZ inflation rate.

Here an important long-term influence is the rate of non-tradable inflation. Which also happens to be the source of inflation over which the RBNZ has most leverage.

This is where the RBNZ warnings of possible interest rate hikes become relevant. An important source of domestic inflationary pressure at present is the housing market: because higher housing costs are adding directly to inflation; because the housing market is drawing in a lot of staff, workers that are proving hard to find almost everywhere; and because higher house prices and higher household debt are encouraging greater spending in general.

The Governor has in recent weeks repeated warnings that the housing market may be about to peak. New housing supply is increasing just as the rate of demand growth is slowing (due to lower net immigration). Plus the RBNZ believes that higher interest rates will probably be required over 2004.

The warnings have been accompanied by the message that the cash rate would probably be hiked in the first quarter of 2004 and now by assumption that the 90 -day bank bill will average 5.75% in the first half of 2004, a rate around 0.6% higher than the average over the last couple of months. The warning is clear: short-term rates - including the variable home loan rate - are about to rise.

The RBNZ appear to be thinking in terms of rates 0.5-1.0% higher next year. The markets suggest the latter rather than the former. Such a rise would be modest compared to the 5.5% 90-day rate increase in 1994 - that's right, within 12 months - but it could still prove costly considering the higher levels of household debt.

The difficulty is, as always, no one really knows the future. It is all very well saying that the rate increase could be modest. But it could be less should the NZ dollar head sustainably higher. And it could be a lot more should local spending continue strongly and supply bottlenecks emerge. It is the latter risk that is greater now that it has been for some quarters and a risk that warrants close consideration of fixed rate loans.

Here too rates are likely to go higher next year. Which is all the more reason to be locking in rates now. And to be locking in rates for 2-3 years (or more) rather than just for 6-12 months. Admittedly the 2-3 years rates are higher than variable rates at present but the fixed rate today will more likely be less than the average variable rate over the next 2 or 3 years.

If that's not reason enough then consider also your anxiety levels - they could well be tested next year.

This is an extract from ASB Bank's home loan report.

« Reserve Bank leaves rates unchangedBanks start to move interest rates »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build ▼4.94 - - -
AIA - Go Home Loans ▼7.49 ▼5.79 ▼5.49 ▼5.59
ANZ ▼7.39 ▼6.39 ▼6.19 ▼6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼5.79 ▼5.59 ▼5.59
ASB Bank ▼7.39 ▼5.79 ▼5.49 ▼5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance ▼7.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One ▼7.54 - - -
BNZ - Rapid Repay ▼7.54 - - -
BNZ - Std ▼7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney ▼7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ ▼6.95 ▼5.79 ▼5.59 5.69
Co-operative Bank - Standard ▼6.95 ▼6.29 ▼6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼5.99 ▼5.89 -
First Credit Union Standard ▼7.99 ▼6.69 ▼6.39 -
Heartland Bank - Online ▼6.99 5.65 5.55 5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 ▼6.65 6.40 -
ICBC 7.49 ▼5.79 ▼5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank ▼7.25 6.89 6.59 6.49
Kiwibank - Offset ▼7.25 - - -
Kiwibank Special ▼7.25 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society ▼7.94 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank ▼7.49 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo ▼4.94 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank ▼8.19 6.49 6.49 6.49
TSB Special ▼7.39 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 6.05 5.79 -
Westpac ▼7.39 ▼6.39 ▼6.09 ▼6.19
Westpac Choices Everyday ▼7.49 - - -
Westpac Offset ▼7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼5.79 ▼5.49 ▼5.59
Median 7.49 5.99 5.79 5.69

Last updated: 3 December 2024 9:25am

Previous News

MORE NEWS»

News Bites
Compare Mortgage Rates
Compare
From
To
For

To graph multiple lenders, hold down Ctrl key while clicking in list box

Also compare rates to OCR
Find a Mortgage Broker

Add your company

Use map
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com