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Mortgage Rates Daily Commentary
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Westpac moves to cut turnaround times; OCR on hold

At the TMM Better Business Conference this week, Westpac unveiled plans to cut turnaround times and overhaul the mortgage approval process. Find out more: [READ ON].

The OCR was kept on hold yesterday, but wholesale interest rates shot up. No mortgage rate changes from the banks yet. Here's how market rates are shaping up.

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Global factors make for low rates

Low interest rates look set to continue as the Reserve Bank’s annual report emphasises the importance of maintaining a flexible monetary policy in the face of global economic challenges.

Monday, September 28th 2015, 2:10PM

by Miriam Bell

The RBNZ’s Annual Report 2014-15 shows that while New Zealand’s economy has performed much better than many other economies, it remains subject to major challenges in the global environment.

Governor Graeme Wheeler said international forces remain a major influence on the economy.

These include large declines in commodity prices – particularly dairy and oil, low international interest rates, and record net immigration levels.

Wheeler said the RBNZ aims to support the New Zealand economy’s adjustment to these forces.

For this reason, when inflation remained below the target range and the exchange rate had not adjusted sufficiently to the decline in dairy prices, the RBNZ made cuts to the OCR, starting in June.

“The decision to cut interest rates was aimed at buffering the decline in the terms of trade and contributing to moving inflation back towards the mid-point of the target range,” Wheeler said.

However, statistical data revisions suggested that capacity pressures were less than forecast.

The report stated the RBNZ also remains conscious of the impact that low interest rates and aggressive lending competition among banks might have on house price inflation.

Economists have speculated that these factors mean the RBNZ will hold the OCR at 2.75% in October.

NZIER senior economist Christina Leung doesn’t see the RBNZ cutting the OCR in October, although she thinks interest rates should remain low for the coming year.

The RBNZ has indicated that a further OCR cut is likely at some point, she said.

“But they will want to reserve some ammunition. Economic activity has softened but not to the degree that emergency intervention is needed.

“The Reserve Bank will want to keep some fire power in case of a real emergency situation.

Leung said that, while the dairy sector remains a key risk and there are downside pressures, there are lots of positives in the New Zealand economy.

“The sharp depreciation in the New Zealand dollar has helped buffer the decline in dairy prices and boosted activity in other export industries, like tourism.

Until there is a sustained pick-up in inflation, the OCR is unlikely to be going up any time soon, Leung added.

Westpac’s economists have also said they expect the Reserve Bank to pause at the October OCR review, before delivering a cut in December.

ANZ economists have said that, like the RBNZ, they believe the risks are skewed lower, and all else equal, that implies lower short-term interest rates.

The main focus of the RBNZ’s annual report was on how well the bank achieved its strategic goals over the last year plus its accounts, but it also touched on the fast-approaching LVR restrictions.

Wheeler said the bank remains concerned about the financial stability risks that could come from a major correction in Auckland house prices. 

A strong supply response over several years is needed to address Auckland’s housing imbalance, but macro-prudential policies will help, he said.

“The LVR measures and the Government’s tax policy initiatives should begin to ease the impact of heightened investor activity and help lower the financial and economic risks while important regulatory and infrastructure issues are addressed and additional investment in new housing takes place."

Tags: interest rates OCR RBNZ Westpac

« Limited low-deposit lending to investorsMore OCR cuts likely – despite housing concerns »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 11 November 2019 4:01pm

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