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Full OCR cut should be passed on: McLachlan

Co-Operative Bank led the field in cutting its floating interest rate following the OCR announcement but it wasn't a planned move to be first off the block, chief executive Bruce McLachlan says.

Friday, March 11th 2016, 3:10PM

"Our logic was to do the right thing for our customers which we believe there was no reason not to pass on that 25 base point cut to our customers. We didn't deliberately set out to be first, it was just out of the process that we normally do. It just so happens that others were slow rather than we were quick, I think," he says.

"We are small and nimble though. So we can, when we're surprised, we're able to get the people together quite quickly and make a good decision without having to go through a bureaucratic system which might take days.

McLachlan has described the OCR cut by the Reserve Bank Governor Graeme Wheeler as a "deliberate action to surprise the market."

"Why? He knows a bigger reaction will get the currency down. He's really desperate to get that down which is the key for him to re-balance the things he needs to get inflation to the level that's within his band." 

The currency was important to Wheeler, McLachlan says. 

"First of all it's about dealing with external balances between exports and imports. Certainly with our dairy price coming down so far that impacts our export. There's a risk that there needs to be a balance in that current account. So they would the really like the currency to be an offset to the dairy price fall.

"Secondly an over valued exchange rate depresses local prices. So one of the things that is keeping that, is keeping inflation below the bottom end of his band."

McLachlan says this week's cut will only strengthen the housing market.

"My personal view is the housing market is as strong across New Zealand as we've seen it for a very, very long time. Prices there are anecdotal stories everywhere which are not yet in the data. The market is incredibly strong and I think this is going to fuel that even more.

"The stock of houses is really low. Demand is really high and there is only one thing that can give and that's the price and that's what's happening," he says. 

 

Tags: OCR RBNZ The Co-operative Bank

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.25 2.59 2.89
ANZ 4.44 2.85 3.19 3.49
ANZ Special - 2.25 2.59 2.89
ASB Bank 4.45 2.25 2.59 2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▼2.25 ▼2.55 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼2.85 ▼3.15 3.39
BNZ - TotalMoney 4.55 - - -
Lender Flt 1yr 2yr 3yr
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 ▼3.40 ▲3.64
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 ▼2.55 ▲2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.79 2.99 3.29
SBS Bank Special - 2.29 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 ▼2.25 2.59 2.79
The Co-operative Bank - Standard 4.40 ▼2.75 3.09 3.29
TSB Bank 5.34 3.05 3.29 ▲3.59
TSB Special 4.54 2.25 2.49 ▲2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼2.85 3.19 3.49
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼2.25 2.59 2.89
Median 4.55 2.71 2.99 2.89

Last updated: 6 May 2021 10:51am

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