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RBNZ finally gets a response

If ASB had not kicked off mortgage rate increases yesterday, then the Reserve Bank would have started thinking in terms of boosting the Official Cash Rate (OCR) 0.5% in July simply to force the response it wants, says BNZ economist Tony Alexander.

Friday, June 18th 2010, 11:55AM 2 Comments

by Jenha White

In the BNZ Weekly Overview he points out that the Reserve Bank last week raised the cash rate from 2.5% to 2.75% with the explicit intention that banks raise lending rates - otherwise nothing has changed apart from reduced bank margins.

The Reserve Bank almost certainly won't have to do that now that increases have started and BNZ expects a 0.25% move in five weeks time.

As for what borrowers should do - the raw numbers say fix one to three years. But Alexander says it is a big ask to jump into a three or even two year rate from current still low floating rates.

There is also a risk that the Reserve Bank does not raise rates as rapidly as BNZ has pencilled in given risks in Europe and the chance the current unwillingness of households to borrow remains for another year or two.

"So it is really still the toss of a coin with awareness needed that there is absolutely no canny thing a person can do to avoid higher financing costs over the next three years," says Alexander.

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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Comments from our readers

On 19 June 2010 at 10:38 am Alan Brown said:
Yes , the ocr ws expected to rise. If Auzzy reaises their's ours will follow.
Keep an eye on Europe I don't think the rates will increase that rapidly.
On 21 June 2010 at 2:16 pm anita s said:
Bollard sitting in his little glass cage has no idea of what is really happening out there in the market place. Bollard is not the market force. The banks, probably for a change have a better idea whats happening out there. Either way, raise interest rates up unrealistically and it will start the next round of bankruptcies... maybe the banks know this?
Commenting is closed

 

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

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