No OCR change this year, lower mortgage rates possible
Today’s official cash rate announcement and monetary policy statement will have come as a shock to those who had been predicted an increase in the rate this year, commentators say.
Thursday, March 14th 2013, 11:48AM 
3 Comments
by Susan Edmunds
And it may even lead to lower mortgage interest rates.
A survey by this website last week showed that five of 18 economists expected some movement in the OCR by the end of this year. The surprisingly dovish tone of today’s announcement has put paid to that - and Wheeler says there will be no OCR hikes at least until the end of 2013.
While Reserve Bank governor Graeme Wheeler acknowledged a strengthening in the economy, he pointed out that it was not uniform. And while he again signalled the bank was keeping an eye on house price inflation, he pointed out that the labour market remained weak and the high dollar was hurting exporters.
ANZ chief economist Cameron Bagrie said the statement had poured cold water on ideas that a rate hike could be looming.
“Rates aren’t going anywhere for a long time.”
Robin Clements, of UBS, said the tone of the statement was surprising given the signs of recovery that had been seen in the economy. He said the message from Wheeler was that the bank was in a holding pattern. What happened next was up in the air.
Forsyth Barr’s Matt Sturmer said the statement seemed to be a change of tone for Wheeler. While previously he had ruled out rate cuts, he seemed to now be saying anything was possible, depending on what happened, particularly as many exporters are contending with a drought on top of a high dollar.
Sturmer said it seemed unlikely there would be any rate rise before 2014.
Westpac chief economist Dominick Stephens, who had predicted a 2013 OCR hike, said he agreed the high dollar was reducing the need for OCR hikes.
“However, we had expected that to be balanced out by concern about the possible inflationary consequences of rising house prices and stronger domestic economic activity. The RBNZ's statement has produced a fall in swap rates, which could in turn lead to a drop in mortgage rates. That will stimulate the housing market further - an unhelpful development for the RBNZ.”
| « OCR on hold: RBNZ | ANZ cuts a rate but increases others » |
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Comments from our readers
Then canvas advisers to see if their recommendation also makes their clients aware of pricing policies of lenders if they also sell insurance products.
Some may be selling their insurance products to mortgage clients which may have affected interest rates offered to clients, especially at refixes ??
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