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ASB predicts “mild” OCR increase

Lender ASB believes there will be a “mild” tightening cycle at the Reserve Bank, with floating and fixed rate mortgages expected to remain stable until the end of next year.

Thursday, July 5th 2018, 3:48PM

by Dan Dunkley

In its latest Home Loan Rate Report, ASB says it anticipates RBNZ monetary tightening to be “modest in relation to historical norms”. The bank said it expects central bank policy to limit uplift in local short-term rates.

The bank believes short-term fixed rates offer the best value for Kiwi home buyers in the current market, with competition between the banks helping to suppress rates. The bank’s team of economists said: “While the future is inherently uncertain, our forecasts suggest carded 1- to 2-year fixed rates are unlikely to approach the current floating rate until about 2020/2021.

“As such, splitting the mortgage into different terms, or a mix of floating and short-term fixed mortgages, is a strategy for keeping some flexibility while locking in some interest rate certainty,” the bank argued.

Like many of its rivals, the lender does not expect the Reserve Bank to raise the OCR rate until November 2019.  However, ASB believes there is an outside chance things could accelerate if rate increases in other major markets, such as the US, feed through to New Zealand.

Mortgage lending has risen this year after a slow end to 2017 and a tough start to this year, according to recent data. RBNZ statistics for May show that lending rose to $6.59bn, up from $5.37bn in April and just $3.69bn in January.

First home buyers, buoyed by continued low interest rates and weakened demand from property investors, are beginning to take up a larger slice of the New Zealand market. They borrowed over $1.1bn in May, up from $833m the same month last year, according to the Reserve Bank data.

Tags: ASB interest rates LVR Macro Prudential Tools OCR

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 ▼4.99 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼4.89 - -
Co-operative Bank - Owner Occ 6.25 ▼4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 ▼5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 5.29 5.39
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 5.60 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 ▼4.79 5.15 ▼5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 6.79
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society ▲6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 ▼5.39 ▼5.79 5.99
SBS Bank Special - ▼4.89 ▼5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 ▼5.65 6.09 6.39
TSB Special 6.25 ▼4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 ▼5.55 6.05 ▼6.29
Westpac - Offset 6.39 - - -
Westpac Special - ▼4.95 5.45 ▼5.69
Median 6.34 5.33 5.79 5.93

Last updated: 11 August 2022 8:40am

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