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Upward pressure on mortgage rates: ANZ

Borrowers still face upward pressure on mortgage rates despite a lower-for-longer outlook on the Official Cash Rate, according to economists at ANZ.

Tuesday, September 24th 2019, 9:50AM 1 Comment

As economists tip the Reserve Bank to cut the OCR below its record low of 1% later this year, ANZ warns it might not be all good news for borrowers.

The major lender's economists, including Sharon Zollner, say a deterioration in global financial markets could raise the cost of wholesale funding and force rates to rise in New Zealand.

ANZ warns the Reserve Bank would have limited scope to "offset the impact on retail interest rates", with rates at such low levels.

ANZ says the record low OCR "actually hobbles the most effective channel of monetary policy to some extent".

It adds: "It is likely that were global risk aversion and risk premiums to rise markedly, New Zealand bank funding costs would rise. And in theory, given how low the OCR is now, depending on the size of the move, we could even get to the point where the RBNZ does not have sufficient conventional ammunition to prevent retail interest rates rising."

Like most in the banking sector, ANZ expects the Reserve Bank's new capital proposals will lead to increased mortgage rates.

The bank believes lending rates could be "45-75bp higher in the transition period and anything from 20-120bp higher in the long run".

The bank's economists add: "Either of those could be tricky to fully offset with the OCR, given we are forecasting it to get so low with only a -25bp placeholder in there for the impact of the capital changes for now."

  

Tags: ANZ Mortgage Rates OCR OCR forecasts RBNZ Sharon Zollner

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Comments from our readers

On 24 September 2019 at 4:22 pm Maxwell K said:
In my opinion the 4 major Australian banks in NZ have a credibility issue.
I base this view on the recent outcome of the the Australian Royal Commission into banks.
The resultant outcome was not a good look for many banks and in particular one of the largest ANZ.
Going forward I can no longer place any credence on anything they say until such statements have been verified and commented on independently once out in the public arena.
I am of the banks need to word hard to regain the respect of the public.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

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