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The $50 billion idea that will push down home loan rates

ANZ economists predict the Reserve Bank's funding for lending programme (FLP), designed to push down interest rates, could hit $50 billion.

Friday, October 23rd 2020, 8:50AM

Sharon Zollner

The FLP is a new tool in the RBNZ's armoury to help the economy through the Covid crisis. 

In their latest piece of analysis, ANZ economists, led by Sharon Zollner, suggest the FLP could be as large as $30 billion-$50 billion, and believe the Reserve Bank will go big to ensure the scheme succeeds. 

The FLP will help mortgage rates go "meaningfully lower" in the months ahead, the economists said.

According to ANZ, FLP is the "next cab off the rank" as the central bank attempts to stimulate the economy. 

The funding programme, which will lower borrowing costs for retail banks, is expected to be implemented by the end of the year.

It comes ahead of a potential move to a negative official cash rate next year. 

A negative OCR is expected to further lower rates in the next 6-9 months, with mortgages tipped to drop to 1.5%. 

The ANZ team say the FLP could take some of the short-term pressure off the Reserve Bank to lower the OCR.

Nonetheless, the team predict the OCR will fall, amid a "very challenging" outlook for the labour market and inflation in the wake of Covid-19.

"We still expect that the OCR will be dropped by 50bps in April, all things considered. But the introduction of the FLP tilts risks towards a lower or negative OCR occurring slightly later (say at the MPS in May) or more gradually (perhaps in 25bps increments, or with a cut to just above zero before deciding whether to take the OCR even lower)."

Tags: ANZ Lending Mortgage Rates OCR OCR forecasts RBNZ Reserve Bank

« High LVR investor lending up 134%Weak inflation means negative OCR: Kiwibank »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 ▲3.15 ▲3.55 ▼3.75
ANZ Blueprint to Build 1.68 - - -
ANZ Special - ▲2.55 ▲2.95 ▼3.15
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
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 Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.29 2.69 2.99
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 ▲2.89 ▲3.29 ▲3.49
SBS Bank Special - ▲2.39 ▲2.79 ▲2.99
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.78 2.99 3.29

Last updated: 5 August 2021 9:02am

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