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Mortgages

Mortgage Rates Daily Commentary
Thursday 26 November 2020  Add your comment
Record October mortgage lending; Is a negative OCR now less likely?

Mortgage lending soared to $7.7 billion last month, the highest October figure on record, and further evidence of the red-hot housing market: [READ ON]

Finance Minister Grant Robertson's pleas to the Reserve Bank to control house price inflation could reduce the odds of a negative OCR next year, according to economists: [READ ON]

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OCR hike to come - later

The Reserve Bank’s next OCR move is likely to be up – although it won't be for a while, a new HSBC report says.

Tuesday, January 24th 2017, 1:47PM

by Miriam Bell

New Zealand has good reason to be optimistic about its economy and the inflation tide may also be turning, according to HSBC’s report “New Zealand in 2017: Outperforming Again”.

It states that strong growth is being driven by record rates of inward migration, rising construction activity and a booming tourism industry.

While weak conditions in the dairy sector were, until recently, weighing on the positive story, the dairy sector is now recovering.

Following strong GDP growth of 3.2% in 2016, HSBC expects continued above-trend growth of 3.0% in 2017.

The international bank’s chief economist, Paul Bloxham, said that means New Zealand’s economy is, once again, firing on all cylinders and experiencing a “rock star revival”.

Further, the country’s low inflation challenge may finally be over, he said.

“We expect the combination of continued strong local growth and higher commodity prices to see CPI inflation edge higher in 2017.

“We expect this to also mean that the Reserve Bank’s next cash rate move is likely to be up, although our central case does not have hikes until 2018.”

Given CPI inflation has been below the target of “near 2%” for five years, HSBC thinks the Reserve Bank might be quite cautious about lifting rates.

Bloxham said the Reserve Bank will want to see a lift in both inflation and inflation expectations and will probably prefer to respond too slowly than to choke off the early stages of a lift in inflation.

“There is always a possibility, given the strength of the economy, that inflation lifts more quickly, which would most likely result in early or more aggressive rate hikes than we are currently assuming.”

But there is little evidence of this latter scenario at this point, he said.

The end of Reserve Bank governor Graeme Wheeler’s current term in September and the general election in 2017 could also impact on the bank’s moves.

Bloxham said these factors would take second place to the fundamentals of growth and inflation in the Reserve Bank’s decision making.

“However, at the margin, these uncertainties could lead to more stable (or less active) monetary policy than would otherwise be the case.”

HSBC’s take on the future of the OCR is not too dissimilar from that held by local banks.

ANZ economists think the next move in the OCR will be up and there is potential for a hike in late 2017, but say the Reserve Bank can afford to show some patience.

ASB economists expect the Reserve Bank to leave the OCR on hold for the foreseeable future and think that market pricing of an OCR hike by the end of 2017 is getting ahead of itself.

For Westpac economists, OCR hikes are a long way off and speculation about whether the OCR could be hiked again as early as this year is more to do with markets’ desire for action than anything else.

Tags: ANZ ASB Graeme Wheeler HSBC interest rates OCR OCR forecasts RBNZ Reserve Bank Westpac

« Surprise spike in mortgage lendingQuiet on the investor lending front »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 ▼2.45 ▼2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 3.15 3.25
SBS Bank Special - 2.49 2.65 2.75
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.49 2.69 2.79
Median 4.55 2.94 3.07 2.80

Last updated: 23 November 2020 12:23pm

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