tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, August 14th, 2:43PM

Mortgages

rss
Latest Headlines

Community transmission could force negative OCR: Kiwibank

Community transmission of Covid-19 could force the Reserve Bank to slash the Official Cash Rate to negative territory, according to economists at Kiwibank.

Monday, July 13th 2020, 5:35PM

In their latest weekly report, the economists say a "shock" outbreak, and subsequent return to lockdown, could cause "the RBNZ to embark on a path below zero". 

According to the team, the worst-case scenario would mean a 75 basis point cut to -0.50% for the central bank rate. 

New Zealand continues to win the battle against Covid-19, however, and economists say the Reserve Bank will stick to its quantitative easing programme, unless conditions drastically change. 

After months of growing enthusiasm for negative rates across the market, economists now believe they are an outside bet.

The Kiwibank team, lead by Jarrod Kerr, (pictured) expect wholesale swap rates to hold steady next year, near 0.25% "as the RBNZ’s on-hold guidance likely extends into 2022".

QE, through the RBNZ's Large Scale Asset Purchase programme, is viewed as the preferred method to stimulate the economy and keep interest rates down. 

Kiwibank expects the Reserve Bank to expand its LSAP programme into 2022 in August, and boost the total amount towards $100 billion. "The program is likely to hit $120bn into 2023, the economists said.

The economists believe the next best policy tool wold be a term funding facility for lenders, as seen in Australia. 

"Cheap term funding will lower all bank rates immediately," the bank said. 

Kiwibank also noted a strong resurgence in the housing market in June. 

"The anecdotes of recent weeks appear to be true, with both sales and house prices growth jumping in June. Large swathes of the economy have resumed business as usual, which seems to have been mirrored by the housing market."

The bank suggests a "first home buyer binge", encouraged by the end of LVR restrictions, is behind the strong June data. 

 

Tags: Kiwibank

« Why bank changes are good for advisersProfits below expectations at General Finance parent »

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
  • It starts with governance
    “Hi David and thanks for your words also. I did read the FMA stuff before the post and also in my first response mention...”
    4 hours ago by gavin austin adviser business compliance
  • AMP reports profit drop amid 'solid' result
    “Sadly, AMP is becoming less and less relevant. Apart from this tiny blip of positive cash inflow, they've been bleeding clients...”
    5 hours ago by Contrarian
  • It starts with governance
    “Good words Gavin - might also mention the FMA publication - https://www.fma.govt.nz/compliance/guidance-library/corporate-governance-in-new-zealand-principles-and-guidelines/...”
    5 hours ago by dcwhyte
  • It starts with governance
    “adviser1 - go talk to Partners Life. they have a great tool to help with this sort of stuff. ...”
    7 hours ago by Tash
  • It starts with governance
    “Thanks JP, if we know what the rules are we can follow them, if we know what the solutions are we can implement them....”
    1 day ago by Adviser1
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
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 5.50 - - -
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 3.35 3.85 -
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 2.55 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 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 ▼3.55 ▼3.49 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 14 August 2020 1:06pm

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