The big news last week was the Reserve Bank’s decision to leave the Official Cash Rate unchanged at 6.75% and its comments that lower rates are unlikely in the foreseeable future.
Reserve Bank governor Alan Bollard made it clear last Thursday that lower mortgage rates are some way off. “There is no scope for an easing in policy in the foreseeable future,” he said.
The bank also reiterated the view expressed previously that “a further tightening would likely be required.
With comments like that one would expect no downward movement for rates of less two years or less – but that did happen.
After the announcement Kiwibank dropped its two-year rate 15 basis points to a market-leading 7.35% and the National Bank dropped its two-year rate to 7.65%.
However against the trend Sovereign and Loan Plan increased their six-month rates.
Perhaps the most interesting thing for home loan borrowers is that rates in the longer-term area (fixed rates of three years plus) are continuing to fall.
These falls have little to do with the Reserve Bank, instead they are the result of what’s happening overseas. The key factor here is that growth expectations for some of the major economies are falling and there is speculation that there may be rate cuts in the United Kingdom and Europe.
Two of the banks, ANZ and National, have been the key movers in this area last week and they were joined by the biggest non-bank lender, Sovereign, in lowering rates.
Yesterday they were joined by a number of non-bank lenders including Asteron, GEM Home Loans, General Finance, Global Home Loans, Pacific Home Loans, Public Trust and Wizard.
Three-year rates now fall in a range of between 7.50% and 8.25%, while the range for two-year rates is slightly larger going from 7.35% to 8.35%. Floating rates remain unchanged following the RBNZ’s announcement.
To compare home loan rates go to http://www.goodreturns.co.nz/section/200.html
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