About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Sunday, November 17th, 9:15PM
rss
Latest Headlines

Reserve Bank proposals could force $2 billion mortgage hike: UBS

The Reserve Bank's new capital proposals could force Kiwis to pay $1.9 billion-$2.7 billion more for their mortgages each year, investment bank UBS has warned.

Friday, January 18th 2019, 9:45AM

Swiss investment giant UBS has taken aim at the proposals in a highly critical note. It believes New Zealand borrowers could be hit with rate hikes due to the costs associated with the new proposals, which were first mooted by the central bank last month. UBS believes banks will pass on the cost to home loan customers.

UBS estimates Kiwis could have to pay up to $2.7 billion more on their home loans each year to fund the capital requirements. It believes the rules could see rates jump by 80-125 basis points.

RBNZ, led by governor Adrian Orr (pictured), wants banks to keep an extra 20% to 60% on their balance sheets to guard against risk in the financial system. The capital rules, if implemented, would be the highest bank capital ratios in the developed world, UBS says.

UBS says it disagrees with the RBNZ conclusion that proposals "will only have a minor impact on borrowing rates for customers". UBS analysts believe New Zealand banks will "need to reprice their NZ mortgage book by [about] 80 basis points to about 125 basis points" to achieve the same return on equity.

UBS is highly critical of the RBNZ proposals and believes they could be "unnecessary and potentially damaging" to the country's financial system.

The bank adds: "We believe the RBNZ's endeavours to strengthen the banks could come at a significant cost  to  the  NZ  economy  as  they  appear  to  be  materially  underestimating  the  likely  mortgage repricing."

UBS also predicts the RBNZ move will hit Australian investors in the pocket. The need to hold extra cash in New Zealand could force the Australian owners of the NZ big four to cut their dividend payments to shareholders, the investment bank said.

The investment bank says the RBNZ proposals would be the toughest in the world, surpassing Norway as the strictest in the developed world. 

The RBNZ proposals are a long way from being implemented. The central bank has launched a five year consultation period on the changes.

Tags: RBNZ Reserve Bank

« Westpac back below 4%Kiwibank brings two year rate below 4% »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • When is a client really a client?
    “In a previous reply I responded to the concept of payment as a trigger. I actually agree it’s not. While we don’t often...”
    8 hours ago by regant
  • When is a client really a client?
    “Tash are you being deliberately obtuse? I didnt say you have to keep sending/giving disclosure every year, I said you have...”
    8 hours ago by regant
  • FMA fesses up to website breach and apologises
    “@LNF I was specifically speaking to the word not the mandatory. So not misunderstanding, more a crack at the culture that...”
    1 day ago by JPHale
  • When is a client really a client?
    “@tash, as insane as it sounds, yes. The mishmash of rules around this basically say you both need to keep records of who...”
    1 day ago by JPHale
  • When is a client really a client?
    “wow ..... looks like advisers have to watch out for booby traps. do clients need to have any responsibilities? who do...”
    2 days ago by w k
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

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

Last updated: 15 November 2019 4:16pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com