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Mortgage Rates Daily Commentary
Monday 15 July 2024  Add your comment
Distance between inflation and RBNZ’s target narrows; SBS rates change

All eyes this week will be on the Consumer Price Index data in the wake of the Reserve Bank’s slight change in mood on when interest rates will come down. [READ ON]

SBS has cut its 6 Months Lending rates, effective Saturday, 13 July 2024 [See here]

 

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More OCR cuts likely – despite housing concerns

Global economic concerns mean more “easing” of the OCR is likely, even though this could further fuel the already-hot housing market, the Reserve Bank Governor has said.

Wednesday, October 14th 2015, 11:15AM

by Miriam Bell

In a speech to the Institute of Finance Professionals conference today, Reserve Bank Governor Graeme Wheeler said central banks were operating in a turbulent and uncertain world.

Global economic growth is the weakest since 2009 and inflation has also been below target over the past few years in the economies that target inflation.

Despite a significant slowdown in China’s economy, recent economic indicators [for New Zealand] have been more encouraging, Wheeler said.

“Some further easing in the OCR seems likely, but this will continue to depend on the emerging flow of economic data.”

However, with annual house price inflation in Auckland reaching 26% and house-price-to-income ratios double those in the rest of New Zealand, the RBNZ was concerned about how an OCR cut could affect the housing market.

“We remain conscious of the impact that low interest rates can have on housing demand and its potential to feed into higher price inflation,” said Wheeler.

“It is important also to consider whether borrowing costs are constraining investment, and the need to have sufficient capacity to cut interest rates if the global economy slows significantly.”

The RBNZ has already cut the OCR three times since June this year and it is currently sitting at 2.75%.

While the RBNZ has previously indicated it is likely to cut the OCR again, economists are divided over when that will happen.

ASB economist Kim Mundy said an October OCR remains a close call, but the RBNZ risks missing its inflation target for even longer if it doesn’t cut the OCR and the NZD stays high.

But Westpac chief economist Dominick Stephens said the RBNZ is likely to hold the OCR at its current rate at the October call and cut it in its December announcement.

“Looking beyond the next interest rate decision, we are still comfortable with our view that the RBNZ will need to cut the OCR by more than markets currently anticipate, and are forecasting a 2% low point for the cash rate.”

ANZ chief economist Cameron Bagrie said the stabilising domestic outlook suggests the RBNZ is likely to resist delivering further OCR cuts over the remainder of this year.

Meanwhile, the latest house price data shows that Auckland house prices continue to rise – although price growth is now spreading to nearby regions.

In his speech, Wheeler said housing market considerations do influence the RBNZ’s thinking on the OCR.

But he noted the RBNZ has used macro-prudential policy instruments to help reduce the broader economic risks associated with a potential correction in Auckland house prices.

The RBNZ’s new LVR restrictions for Auckland investors come into force on 1 November. 
 

Tags: interest rates Macro Prudential Tools Mortgage Rates OCR OCR forecasts property investment RBNZ

« Global factors make for low ratesAuckland mortgage fraud under investigation »

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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 ▼7.45 ▼7.09 ▼6.95
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.85 ▼6.49 ▼6.35
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 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
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
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 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 18 July 2024 10:19am

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