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Economic news points to higher rates

Weekly Home Loan report: The message on home loan rates is still the same - there won't be any falls for sometime now.Since our previous home loan report the likelihood of more rises, not cuts has emerged.

Tuesday, June 27th 2006, 12:00AM

by The Landlord

As one economist noted: "The upward pressure on interest rates has still not completely passed."

The problem which exists is that the country's economic growth rate has slowed, exactly what the Reserve Bank's hikes in interest rates set out to achieve, however inflation is still high, sitting at around 3% annually and expected to stay around this level for the next couple of years.

The central bank has taken the view that it will keep its Official Cash Rate at 7.25% for the foreseeable future and cuts are possible around the second half of next year.

However, if it doesn't stick to this plan and decides it needs to tackle inflation then there is the prospect of rates going up again.

In the home loan market we are likely to see the floating rate and short-term rates follow the pattern of what is happening in New Zealand.

In the longer term market rates will follow what is going on overseas - and that is a different story altogether following comments from United State Federal Reserve chairman Ben Bernanke. He rocked markets with recent comments on inflation, and since then expectations for US monetary policy have shifted dramatically.

A rate hike this week is viewed as a done deal. Another monetary tightening in either August or September is also expected.

That means longer term rates in New Zealand will almost invariably rise.

During the past week the trend has been for rates to keep increasing. Amongst the banks ASB, Bank Direct and TSB have increased their rates.

ASB increased most of its rates by 5 to 30 points - although its 2-year rate remains the same and its 5-year rate decreased by 5 points. Bank Direct increased all fixed rates by 5 to 20 points and TSB's 3 to 5 year rates increase by 10 to 15 point.

There has also been plenty of action in the non-bank lending sector with increases of 10 to 25 points. To see all the increases click here.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.49 7.35
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 6.89 6.75
ASB Bank 8.64 7.39 6.89 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.29 ▼6.85 ▼6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.89 ▼7.45 ▼7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.15 - -
Co-operative Bank - Owner Occ 8.40 7.35 6.89 6.75
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.85 7.39 7.25
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 7.89 7.65
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 6.89 6.75
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.39 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.95 7.45 7.29
SBS Bank Special - 7.45 6.95 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.55 7.55
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 6.75 6.75
Unity 8.64 6.99 6.85 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.45 7.37 6.77

Last updated: 26 February 2024 9:10am

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