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Bank LVR limits on hold; Co-operative Bank cuts rates

Banks have not relaxed loan-to-value ratio limits for investors, despite the Reserve Bank's move to scrap LVR rules: [READ ON]

The Co-operative Bank has slashed its 18 month and two-year rate to 2.79%. Take a look at the latest rates here: [READ ON]

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Bollard leaves rates unchanged despite worsening inflation outlook

Reserve Bank governor Alan Bollard has left interest rates unchanged, saying that although the inflation outlook has worsened, it would be wrong to counter short-term pressures with monetary policy.

Thursday, June 8th 2006, 10:11AM

by Jenny Ruth

Bollard left his official cash rate (OCR) unchanged at 7.25%. Oil prices have surged about 20% and the sharp drop in the New Zealand dollar in March and April will push up the prices of imports, Bollard says.

But recent economic activity has been weaker than expected and household spending is expected to be constrained by a weakening housing market, high petrol prices and slowing employment growth, he says.

Bollard reiterated that there is no scope for an easing this year. The wholesale interest rates market obliged him by pushing out its expectations of a rate cut even further – the pricing suggests that it’s almost given up on a cut in January and starting to doubt whether there will be one by March or April.

"It really confirmed those fears that inflation really is a key issue and that the Reserve Bank was likely to be mindful of that," says Anthony Byett, chief economist at ASB Bank.

"It looks like relatively stable interest rates for the rest of the year," Byett says.

Back in March, the central bank was forecasting inflation in the year ending March 2007 would be 2.6%. Today’s statement changes that radically to 3.9%, although it is expected to fall back under 3% during 2007.

"It could be particularly ugly in the near term," says Craig Ebert, an economist at Bank of New Zealand. A big risk is whether the Reserve Bank is being too optimistic about how quickly inflation pressures will abate, he says.

Until recently, the extent of inflation pressures has been masked by factors such as the high currency and the fact that firms have squeezed margins rather than putting up prices. "You have to wonder whether the next move by firms will be to try to recoup those margins," Ebert says.

« OCR remains at 7.25%Pioneer buys Pacific »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 3.35 3.19 3.85
ASB Bank Special - 2.85 2.69 3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 2.79 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.39 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 4.40 2.95 2.95 3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 2.65 2.79 3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
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 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

Last updated: 3 June 2020 3:56pm

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