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OCR cut: advisers predict slowdown

The Reserve Bank's decision to lower the official cash rate to 0.25% is good news for borrowers, but advisers fear Covid-19 will significantly slow activity in the housing market.

Monday, March 16th 2020, 9:20AM

Banks including ANZ and Westpac have announced they will pass on rate cuts to borrowers, on floating rates at least, this morning. 

NZFSG's Bruce Patten said the cuts were "great news", but only expects 0.2% to be passed on to fixed rates. 

He welcomed the long-term nature of the OCR cut. "It's great to hear that the cut is being held for 12 months. This will give people confidence," he added.

Squirrel's John Bolton expects a busy period for brokers, as customers are expected to try and renegotiate their home loans in the home-buying process. 

"There's going to be a rush of people wanting to get in on the new rate even if they're locked into settlement," he said.

Bolton says banks including ASB have typically allowed customers to take newer, lower rates, but other lenders charged fees. 

"We will probably be doing a lot more loan structuring this week," he said. 

Bolton believes adviser customer turnover could take a hit from the coronavirus crisis, with falling business confidence and people's employment at risk. 

"Everyone is nervous and business confidence is getting smashed. The question is, how much will the housing market slow down? It will be like previous slowdowns, I don't think prices will change much, but people will stop buying and selling. For us mortgage brokers, it is going to be a return back to a semi-frozen market with lower levels of activity."

Benje Pattison said customers were likely to get "some modest relief" to rates, but said cuts may be limited.

"Bear in mind that our banks also have to borrow on international markets where credit will be in tight supply. As a result, banks are still likely to be more cautious about additional lending," he said.

Pattison warned New Zealand was "now in full-blown financial, as well as public health and economic crisis mode".

"The actions taken now are crucial to softening the interim blow, so that societies and economies can recover once the public health crisis comes under control," he added.

Kris Pedersen expects a "rush" of clients wanting to move to new lower rates.

"It’s hard to say until we’ve seen a few whether there will be value or not in it for them as in many cases the break costs may offset the rate savings."

Pedersen says banks may look to review their interest-only lending restrictions. 

"It will be interesting to see if the banks relax their interest-only stance at all as this is quite tight at present but is another way to provide cashflow relief especially to SME owners."

 

Tags: John Bolton Kris Pedersen Lending Mortgage Rates NZFSG OCR Squirrel

« Banks pass on floating rate cuts after OCR decisionRBNZ delays new capital rules »

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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 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 ▼3.34 ▼2.99 ▼3.34
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 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 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.45 2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
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
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 3.09 3.15
SBS Bank Special - 2.49 2.59 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.49 2.69 2.79
Median 4.54 2.95 2.99 2.97

Last updated: 3 December 2020 9:38am

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