by Jenha White
All of these lenders cut the one-year rate by 50 basis points among other changes which lead to the median for the major banks dropping from 6.45% yesterday morning to a 5.95% median today. The floating rate median is now higher as a result at 6.20%.
The changes by lenders have been made in response to the sudden drop in swap rates following last week's earthquake as the markets expectations around the Official Cash Rate (OCR) changed to predict a cut by the Reserve Bank.
Westpac was quick off the mark in the wake of ANZ/National's changes yesterday, dropping its six-month and one-year rates by 50 basis points to 5.75% and 5.95%, its 18-month rate by 40 basis points to 6.29% and its two and three-year rates were cut by 10 and 11 basis points respectively to 6.49% and 6.99%.
ASB, BankDirect, Sovereign & NZ Home Loans also reduced six-month and one-year rates by 50 basis points, 18-month rates by 35 basis points and two and three-year rates were cut by 20 basis points.
These were the only lenders to also reduce longer term fixed rates, cutting the four and five-year rates by 15 basis points.
TSB and General Finance dropped the one-year rate by 50 basis points to 6.15%, the two year-rate by 20 basis points to 6.89% and the three year rate by 11 basis points to 7.19%.
Short-term fixed rates have seen all the movement so far this week, with no changes to floating rates because they are directly affected by changes in the Official Cash Rate (OCR).
The Reserve Bank will review the OCR in its Monetary Policy Statement next Thursday and if the predictions of bank economists are correct, a 50 basis point cut from 3.00% to 2.50% could be on the cards.
Even the Prime Minister John Key said to Bloomberg today that the market has priced in a cut from the Reserve Bank and "that would probably be my expectation, that the Reserve Bank would cut" .
If this occurs, floating rates could also see a drop of 50 basis points.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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