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No move in OCR yet: Economists

Despite a change in tone from the Reserve Bank this month, a survey of economists shows none expect the official cash rate to move this week.

Monday, April 22nd 2013, 9:18AM

by Susan Edmunds

Of the 12 economists surveyed, all said the OCR would remain on hold at 2.5% - but one is predicting a move next quarter, to 2.75%.

Tom Kennedy, of JP Morgan, predicted the earliest increase and said he was only 75% sure that the rate would stay the same this week.

Earlier this month, Reserve Bank deputy governor Grant Spencer caused ripples when he said house price inflation was a concern. He said if it continued at its current rate, the bank would consider a monetary response.

Governor Graeme Wheeler had only recently indicated that the OCR would remain on hold until at least next year – and had even hinted that a cut was not entirely out of the question.

Annette Beacher, of TD Securities, said there was no room for a downward move while house prices were increasing so quickly in the main centres. She expects the next move in the OCR to be to 2.75% in December.

FNZC, Infometrics, ASB and BNZ all expect that 25 basis point move to happen in March.

ASB economist Jane Turner said Spencer’s comments had highlighted the Reserve Bank’s concerns about risks from the housing market and a readiness to act if it got out of hand.

But she said the March monetary policy had reviewed house price expectations and lifted the forecast quite aggressively, so there was room for house prices to grow before they became a concern.

Gareth Kiernan, of Infometrics, agreed. “[House price inflation] is such an Auckland-centric story at the moment, they would have to be pretty brave to push up interest rates too soon.”

He said the economy was still sensitive to conditions and while an increase might happen before his March prediction, it was still some way off.

Westpac chief economist Dominick Stephens expected Wheeler to highlight risks on both sides of the OCR equation but to keep the rate at 2.5% this time. He said the bank was stuck sitting on the fence.

“On one side, the Christchurch rebuild and rising house prices have produced surprisingly rapid economic growth and could lead to inflation pressures. But on the other, inflation is low due to the high exchange rate, and the exchange rate could rise even further.”

 

« Competition keeps bank margins low: KPMGBanks cut one-year rates ahead of OCR »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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