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Mortgage rate drop will be minor: ASB

Borrowers will only see "minor" decreases in mortgage rates if the Reserve Bank cuts the official cash rate, according to economists at ASB. 

Tuesday, March 10th 2020, 9:53AM

Amid growing speculation the central bank will slash the OCR to 0.75% or even 0.50% this month due to the coronavirus outbreak, ASB economists suggest mortgage rate decreases will be small. 

A new report conducted by the ASB team, including chief economist Nick Tuffley, concludes rate cuts will be small compared with those seen in the 2018/2019 period. 

"Fixed-term mortgage interest rates could dip further too if the RBNZ cuts the OCR, and wholesale interest rates fall further," the bank's latest report claims. "In saying this, we stress that large falls in carded mortgage rates have already occurred over the past couple of years. We think that any declines will be minor (circa 0.25%-0.5%) compared with the declines recorded in 2018/19."

The bank expects the RBNZ to slash the OCR by 25 basis points this month, and a further 25 basis points in May. 

ASB believes fixing and then rolling shorter mortgages terms is likely to be the cheapest option over a five-year time horizon, if OCR cuts do arrive. 

"Our forecasts suggest mortgage interest rates could get slightly lower over the coming months, but there is a cost in not fixing now which is broadly the difference between floating rates and the fixed term rates currently on offer (over 1% per annum for some terms).

"Borrowers should focus on minimising borrowing costs over the life of their mortgage, rather than attempting to pick the bottom, potentially paying more costs now (by floating) than future savings (by eventually fixing)."

Tags: ASB Mortgage Rates mortgages OCR OCR forecasts

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
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 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 13 July 2020 7:38am

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