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Mortgages

Mortgage Rates Daily Commentary
Thursday 28 May 2020  Add your comment
Reserve Bank believes rates will fall; BNZ cuts; Simplicity 2.5% rate

Reserve Bank governor Adrian Orr believes banks have "room to go" to push home loan rates below current record lows: [READ ON]

BNZ has made further home loan rate cuts, effective this morning. Its 18 month loan drops to 2.79% for investors and owner-occupiers, while its two-year falls to 2.69%, joint-cheapest in the market.

Even KiwiSaver provider Simplicity is getting in on the rate cut action. It has cut its floating rate home loan to just 2.5%.

 

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DTIs cost benefit analysis ordered

Another obstacle has been placed in the Reserve Bank’s path towards the introduction of debt-to-income ratios (DTIs).

Wednesday, February 8th 2017, 2:58PM 1 Comment

by Miriam Bell

Finance Minister Stephen Joyce has told the Reserve Bank to conduct a full cost-benefit analysis, along with a public consultation, on DTIs before any decision is made on their use.

Joyce said he has discussed DTIs with Reserve Bank governor Graeme Wheeler who is concerned about the levels of debt in some households given recent increases in house prices.

“I have decided that, consistent with good regulatory principles, a full cost-benefit analysis and consultation with the public should occur before I consider whether to amend the Memorandum of Understanding (MOU) on macro-prudential policy.”

Given the novel nature of a DTI tool and the fact there are a number of possible policy actions the Reserve Bank could take, it is important the costs and benefits of the different policy options are adequately and rigorously explored, Joyce said.

While the Reserve Bank has been pushing for the ability to add DTIs to its MOU with the government, the government has been less enthusiastic about their adoption.

Late last year a planned meeting, on DTIs, between the Reserve Bank and then Finance Minister Bill English was delayed indefinitely when English ascended to the role of Prime Minister.

At the time, economists said the delay meant it would be unlikely that DTIs would be introduced before the end of 2017.

Today’s announcement makes the arrival of DTIs anytime soon even more unlikely.

Joyce said the Reserve Bank already has a number of regulatory tools available to it to address systemic risks it identifies and he is cautious about adding further tools to the toolkit.

“The use of macro-prudential tools can be complex and affect different borrowers in different ways. I am particularly interested in what the impacts could be on first home buyers.”

This development should please critics of the proposed DTIs who have said their introduction could have a severe impact on first home buyers and is likely to impact negatively on attempts to boost housing supply.

Meanwhile, the Reserve Bank is still collecting information about the DTI levels that borrowers are obtaining and assessing the potential case for the use of DTIs.

It has indicated that public consultation on DTIs will commence in March and take place during the first half of 2017.

In the past, Wheeler has refused to be drawn on the level at which a DTI ratio could be set if it is introduced.

He has also said that if the Reserve Bank did have DTI ratios at its disposal, it wouldn’t introduce them at this time.

Read more:

Progress of DTIs stalls  

Addressing housing market risks  

Risks in new RBNZ proposal  

 

 

 

Tags: Macro Prudential Tools RBNZ Reserve Bank

« Questions over future RBNZ policyWhat the RB governor said »

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Comments from our readers

On 9 February 2017 at 8:46 am LNF said:
Debt to income, or servicing ability used to be standard lending policy. I don't know why that changed. Perhaps debt is an important part of the economy. Perhaps someone who knows a lot more than me can enlighten

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 ▼2.69 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 3.79 4.19
TSB Special 4.54 2.79 2.99 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.79 3.39
Median 4.55 3.32 3.39 3.69

Last updated: 28 May 2020 10:38am

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