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Fixed rates to fall further: Westpac

Retail fixed interest rates will fall even further this year as the central bank considers "aggressive" cuts, according to Westpac.

Thursday, July 25th 2019, 9:57AM 1 Comment

Dominick Stephens

Westpac economists have changed their Official Cash Rate prediction, and now say the Reserve Bank will cut the OCR in August and November.

The big-four bank, joins a growing chorus of lenders, including ASB and ANZ, to predict at least two more rate cuts this year, .

Westpac chief economist Dominick Stephens, say the “domestic economy has clearly slowed further than anticipated”, and the slowdown will prompt the RBNZ to take drastic action.

He says lower business confidence, a recent rise in the exchange rate, and global economic woes will influence the central bank’s thinking.

The economists said the expected pickup in 2019 has failed to materialise.

“We previously expected that the economy would be picking up by mid-2019, on the back of fiscal stimulus and lower interest rates. Instead, recent data suggests that New Zealand economic growth has remained slow.”

The bank believes there is a possibility that the RBNZ could make three more cuts this year.

“The risk to our new call is skewed towards earlier or more aggressive cuts – there is a possibility that the RBNZ could cut the OCR in September, and even a possibility that the OCR could drop below 1%.”

Westpac believes deep rate cuts will boost house price inflation over the next year, with increases of 2% to 7%.

The economists added: “Recent data supports our view. Over the past two months, we estimate that seasonally adjusted housing market turnover has risen 10%. Brisker house sales are a reliable sign of price rises to come.”

The bank predicts the ongoing “search for yield” will see investors return to a “slower-moving” housing market over the next year.

Tags: OCR OCR forecasts Westpac

« Investor lending flat in JuneOCR cut almost certain: BNZ »

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Comments from our readers

On 26 July 2019 at 1:00 pm two cents said:
A slower market is often a saner market for both homebuyers and sellers. Imagine the pushback if New Zealand were to implement a three day ‘cooling off’ period to give buyers a chance to consider their financial commitments?

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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 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 4.15 4.09 4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kiwibank 5.80 4.30 4.24 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.49 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 4.50 4.86 3.89 3.94
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.65 3.59 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 4.49 4.39 4.85
TSB Special 5.29 3.69 3.59 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - ▼3.55 ▼3.45 3.99
Median 5.34 4.05 3.95 4.05

Last updated: 18 October 2019 9:00am

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