Falls and rises in home loan rates
Economists are unanimous that the central bank will again cut its cash rate, with some expecting the decline to be much as 100 basis points. Governor Alan Bollard cut the rate from 5% to 3.5% in late January and the OCR could get close to 2% in this easing cycle.
A recent survey of 11 economists done by Good Returns showed that four are now expecting a 50 basis point cut, three a 75 point cut and four a 100 point cut to 2.50%.
This is bound to drive short-term rates down further. Good Returns predicts that all the banks will have standard short-term rates below the 5% mark, either before the announcement or soon afterwards.
One bank, BNZ, has already rolled out a six-month rate of 4.99%, but it can’t be called a standard rate as it has many conditions attached to it. The first is that the mortgage can’t have a loan to valuation ratio of more than 80%. This has been a common feature of many of the “hot offers” recently.
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