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OCR cut fuel for housing fire

House prices are tipped to rise following last week’s OCR cut.

Monday, March 14th 2016, 11:24AM

by Miriam Bell

To the surprise of many, the Reserve Bank cut the OCR, by 25 basis points, to a record low of 2.25% last Thursday.

To date, bank responses to the cut have been mixed.

ANZ, Westpac and Kiwibank chose to only pass on part of the cut to customers, citing rising funding costs for the move.

ASB took a different approach. It hasn't changed its OCR but has made cuts to many of fixed rates from six months to three years.

The Co-operative Bank passed on the full 25 basis point cut.

However, BNZ chief economist Tony Alexander thinks there may be further cuts to come.

He said borrowers should wait for a week or so before making a decision regarding what term to fix at.

“I would be prepared to punt on a cut within a week or two though this is not guaranteed.”

The OCR cut is likely to fuel the housing market fire, he said.

“Falling interest rate expectations will boost housing demand and push prices higher all around New Zealand.”

The Co-Operative Bank CEO Bruce McLachlan agreed.

He said  the cut would only strengthen the housing market.

"My personal view is the housing market is as strong across New Zealand as we've seen it for a very, very long time. Prices there are anecdotal stories everywhere which are not yet in the data.

“The market is incredibly strong and I think this is going to fuel that even more.

"The stock of houses is really low. Demand is really high and there is only one thing that can give and that's the price and that's what's happening.”

Meanwhile, Westpac senior economist Michael Gordon pointed out that the RBNZ itself has a “very bullish view” on housing.

“It expects nationwide house prices to rise 12% this year, compared to our [Westpac’s] forecast of 5%.

While the latest REINZ data showed a mixed set of housing results around the country in February, Gordon said mortgage approvals, auction clearance rates and valuation enquires appear to have picked up in recent weeks.

This suggests that the currently subdued nature of certain housing markets, particularly Auckland, may not last.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 ▼5.79 6.15
TSB Special 4.79 ▼4.34 ▼4.99 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

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