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Advisers report that it is getting easier to access construction and new build loans, amid growing pressure to increase the supply of new houses: [READ ON]

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Close call on rates this week

Most economists expect Reserve Bank governor Alan Bollard will seize on lower than expected inflation figures and weak September quarter economic growth figures as an excuse to hold interest rates steady next week. But it will be a close decision.

Sunday, January 21st 2007, 4:14PM

by Jenny Ruth

Bollard will review his official cash rate (OCR), currently at 7.25%, on Thursday.

The annual inflation rate for 2006 came in at 2.6%, the first time in six quarters that it has been within Bollard’s zero to 3% target, while the economy grew just 0.3% in the September quarter compared with market expectations of 0.5% and the Reserve Bank’s expectation of 0.7%.

Bank of New Zealand and Deutsche Bank economists think Bollard should ignore these seemingly benign headline figures and raise rates now to prevent inflation getting out of hand in the medium term.

The biggest factor cutting the inflation rate was a 15.2% fall in petrol prices in the December quarter.

“Over the last few years, the Reserve Bank has consistently clutched at any piece of data that might give it the right not to raise interest rates,” BNZ's Stephen Toplis says.

“In our opinion, the storm is brewing which portends inflation back above the Rserve Bank’s target bank in 2008 unless the bank acts now to soften domestic demand,” he says.

Deutsche Bank's Darren Gibbs says other more forward looking figures, such as those showing house price inflation running at nearly 12% and strong household spending, “suggest that the medium-term growth and inflation outlook is at least as strong as believed previously.”

ASB Bank economist Daniel Wills believes the central bank will hold rates steady but maintain its hawkish stance, reserving the right to raise rates further down the track.

Still, he notes that the wholesale interest rates market is pricing in about a 50% chance of a rate hike this week.

« International forces driving rate increasesWarning to homeowners on mortgage payments »

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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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