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TSB makes big rate cuts; Bank profits drop 20%

This morning TSB has made some significant cuts to its home loan lineup. Its 18 month special falls by 30 basis points, and its six-month home loan drops by 40 basis points. See the latest rates here.

With record-low rates and Covid-19 to contend with, bank profits are taking a big hit this year. KPMG's latest report shows profits fell by 20% in the first quarter: [READ ON]

 

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OCR on hold till August - HSBC

Strong growth and a booming housing market mean that HSBC now expects the Reserve Bank to hold off on an OCR cut until August.

Monday, May 30th 2016, 11:07AM

by Miriam Bell

In a Reserve Bank Observer Update today, HSBC announced they have changed their call on the likely date of another OCR cut.

The bank’s chief economist, Paul Bloxham, said the Reserve Bank will cut the OCR further – but it won’t be in June as they previously expected.

“We remain of the view that the Reserve Bank still has a problem with low inflation and will still be worried about the level of inflation expectations.

“But we now favour a 25bp cut in August, after the second quarter CPI print.”

If the Reserve Bank was desperately worried about inflation, there was nothing to prevent it cutting the OCR again in April, yet it chose not to, Bloxham said.

“Not much has changed on the domestic economy since six weeks ago, or indeed, since it cut the cash rate to 2.25% on 10 March.”

Rather, growth has remained strong, the first quarter CPI print was in line with the Reserve Bank’s forecasts, and inflation expectations have lifted slightly.

On top of this, the ongoing strength of the housing market is a concern.

Bloxham said the global interest rate environment has also shifted somewhat, with growing chances of a US Federal Reserve hike in July.

This would be a positive development for the Reserve Bank as it should lead to downward pressure on the NZD, which would help inflation and support growth.

For these reasons, HSBC thinks the Reserve Bank will wait a bit longer to cut the OCR, Bloxham said.

“This tactic would have the added advantage of allowing the Reserve Bank to see the second quarter CPI print and to get a bit more clarity on the Federal Reserve’s likely moves.”

Not so long ago, expectations of a June cut to the OCR were dominant among commentators.

However, recently, a change in tone has started to become evident.

Last week, both ANZ and BNZ cast doubts on the likelihood of an OCR cut in June, while ASB said it was now a 50:50 proposition.

 

 

Tags: ANZ ASB banks BNZ HSBC interest rates OCR OCR forecasts RBNZ Reserve Bank

« Budget unlikely to change Reserve Bank viewsLess urgency to cut OCR but bias remains »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
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 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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