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Banks slash mortgage rates as further OCR cuts signalled

The five largest banks all rushed to cut their mortgage interest rates after the Reserve Bank cut its official cash rate (OCR) for the first time since March 2020.

Thursday, August 15th 2024, 6:05AM

Kiwibank was first cab off the rank and had clearly just been waiting on RBNZ before pushing the button and cutting its floating rate from 8.5% to 8.25% while ASB also cut its fixed-term rates by between 10 and 34 basis points – the latter was its 18-month rate which dropped to 6.15% from 6.49% previously.

RBNZ cut the OCR from 5.5% to 5.25% after saying in May that a further hike was possible and that the first cut wouldn't happen until about this time next year.

Westpac chief economist Kelly Eckhold says RBNZ's decision “leaves us comfortable with our forecast of two further 25bp cuts in October and November.”

That's somewhat ahead of RBNZ's OCR track – it has it dropping to 4.9% in the December quarter, implying one-and-a-bit cuts.

BNZ head of research Stephen Toplis says he's sticking with his view that RBNZ will cut a further 25bp in October, although he notes some in the market believe RBNZ will soon be forced to moving “in 50-point licks.”

“Barring some disastrous partials, or a global shock, a 50-point cut would seem unlikely,” Toplis says.

RBNZ held its quarterly consumers price index (CPI) forecasts unchanged for all of 2025 and 2026 but lowered its quarterly OCR projections through those years by as much as 120bp.

For example, it now expects a 4.1% OCR in the September quarter next year, well below the 5.4% rate it forecast in May.

Toplis says the big difference between May and now was “a significant change in their view on the output gap – the short-term growth numbers were slashed.”

RBNZ now expects GDP in the June quarter fell 0.5% - we won't get the official data until Sept 19 – and that it will have contracted another 0.2% in the current quarter before growth resumes again from early next year.

ANZ's chief economist, Sharon Zollner, says “a binary switch” has clicked over and points to the June quarter CPI which showed widespread subsidence in inflationary pressures and that RBNZ is “betting the house” on that.

The CPI came in at 0.4% in the June quarter, bringing the annual rate down to 3.3% from 4% previously.

Only time will tell how much of that was noise and how much was signals. “The RBNZ has punted on a lot of it being signals,” Zollner says.

Tags: OCR forecasts

« RBNZ cuts OCR to 5.25% and forecasts another cut this yearRBNZ says rate cuts should act faster this time »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.94 - - -
AIA - Go Home Loans 8.49 6.35 5.79 5.79
ANZ 8.39 ▼6.79 ▼6.29 ▼6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.19 ▼5.69 ▼5.69
ASB Bank 8.39 6.35 5.79 5.79
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - ▼6.19 5.79 5.79
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 8.44 - - -
BNZ - Rapid Repay 8.44 - - -
BNZ - Std 8.44 6.45 5.89 5.79
BNZ - TotalMoney 8.44 - - -
CFML 321 Loans 6.70 - - -
CFML Home Loans 6.95 - - -
CFML Prime Loans 8.75 - - -
CFML Standard Loans 9.70 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.15 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 8.15 6.35 5.79 5.69
Co-operative Bank - Standard 8.15 6.85 6.29 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼6.60 ▼6.10 -
First Credit Union Standard 8.50 ▼7.20 ▼6.70 -
Heartland Bank - Online 7.99 6.69 6.35 6.15
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.85 6.45 5.99 5.89
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 8.25 7.19 6.69 6.59
Kiwibank - Offset 8.25 - - -
Kiwibank Special - 6.29 5.79 5.79
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.75 ▼6.69 ▼6.19 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.49 ▼7.05 ▼6.39 ▼6.39
SBS Bank Special - ▼6.45 ▼5.79 ▼5.79
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.94 ▼5.45 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
TSB Bank 9.19 ▼7.09 ▼6.59 ▼6.59
TSB Special 8.39 ▼6.29 ▼5.79 ▼5.79
Unity 8.64 ▼6.29 ▼5.79 -
Unity First Home Buyer special - 6.20 - -
Wairarapa Building Society 8.50 6.65 5.99 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 8.44 6.53 6.10 5.79

Last updated: 3 October 2024 9:23am

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