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Home loans rates not keep up with OCR increases

Borrowers might be in for a brief respite from remorseless pressure to push interest rates ever higher, according to an  economist.

Monday, January 30th 2023, 5:34PM 1 Comment

by Eric Frykberg

But it is not certain that this reprieve will last.    

The official cash rate (OCR) which has grown exponentially in just 15 months and is forecast to go higher. 

Infometrics principal economist Brad Olsen said the interest bill that people actually pay has been rising more slowly than the OCR. 

“Since late 2021, the OCR has increased by four percentage points, but the average one-year fixed special rate has only increased by 3.68 percentage points,” Olsen said. 

“There was a case at one point where banks were pre-loading these (OCR) increases, but in recent times the growth in those sorts of interest rates has not been quite as strong.”

Olsen said this trend had become more marked in the middle of last year and would resume over the next one to two years.  

But the evidence was here even now. 

He said that applying average ratios from before the pandemic, the one-year fixed rate should be 6.80%.  

“I am using as my comparison one-year rates, but the same would hold true for two-year rates,” he said. 

But this slight easing of pressure on borrowers might not last, Olsen said.

“It certainly wouldn't be our view that we have reached the top of the interest rate market,” he said.

“If the Reserve Bank has still got well over a hundred basis points to go, and fixed rates are already behind the curve,  then in our view you are still going to see those rates go up.”

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Comments from our readers

On 31 January 2023 at 10:27 am Andy the adviser said:
You need to go back further than 2021. The banks started increasing the rates before the RBNZ did.

Prior to 2009, the margin between the OCR and standard 2 year rates was 1.5-2.0%. Following the GFC, the margin jumped to 2.5%-3.0% (and higher), and hasn't come down.

Even in the latest round of OCR hikes, the banks got in first.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.09 6.95
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 20 June 2024 10:39am

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