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New round of rate rises

Weekly Home Loan report: This week’s inflation numbers have kicked off a new round home loan rate rises.

Thursday, July 20th 2006, 7:16AM

by Philip Macalister

The consumer price index (CPI) numbers showed that inflation was running at 4%, well outside the Reserve Bank’s mandated 1-3% range. The most basic upshot of this announcement is that the official cash rate isn’t likely to be cut any time soon.

In fact there has been some talk of another rate hike, when the RBNZ makes its next OCR announcement on July 27.

Goldman Sachs JB Were, is one that doesn’t believe that’s a goer: “We believe talk of rate hikes is not sensible.”

Its main line is that while there is short-term pressure on inflation the medium term outlook has not changed.

While a rate hike is being ruled out by some, others are making it clear, cuts aren’t an option either.

“The CPI figures continue to reinforce the fact that the Reserve Bank is in no position to ease interest rates at present, despite a slowdown in New Zealand growth,” ASB economist Anthony Byett says. “This high inflation story is one that is likely to be repeated over coming quarters. In turn, this persistent inflation pressure suggests that any easing in the OCR remains unlikely until well into 2007.”

Your options


What’s the best option at the moment for people looking to take out a mortgage or refinance?

There are two schools of thought. One is to take out a shorter-term fixed rate loan and then refinance in 2007 when rates are expected to be much lower.

Alternatively many people are looking at the five-year rate as it is the lowest in the market.

One common point of agreement seems to be that if you have to take out a loan make the decision quickly as rates have been rising.

Delays may mean you end up with a higher interest bill. What’s on offer?

Fixed rate loans started to rise again with three banks, National, ANZ and HSBC increasing two-year rates around 30 basis points. Their two-year fixed rates are now at 8.30%, and one-year rates around 8.45%

The expectation is that more rate rises will follow.

Currently floating home loan rates range from 8.50% to 9.95%. All the main street banks sit at 9.55%, with only two other lenders higher.

One-year rates are in a reasonably tight range from 7.85% to 8.90% with most providers grouped around 8.35%.

The highly competitive two-year fixed rate market covers a similar range (7.75% to 8.85%) however the main difference is that a number of the banks have aggressively priced their rates and are sitting at 7.85%.

Five-year fixed rates are currently the lowest rates in the market and range from 7.65% to 8.26%. Here the banks are in the mid-range with rates of 7.85%.

For a full list of home loan rates and to compare what’s on offer go to and click on Mortgage Centre.

« NZMBA to question consumer protectionOCR likely to remain the same this week »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

Last updated: 26 February 2021 11:27am

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