The flow through of lower mortgage rates

Although carded one- and two-year fixed mortgage rates are now about 200 basis points (bp) below last year’s high the vast majority of lower mortgage rates have yet to flow though.

BNZ figures show the average mortgage rate actually being paid in February was only 21bp below last year’s high of 6.39%.

By the bank’s estimates put the average paid mortgage rate closer to 5.6% in six months.

On $370 billion of housing debt, that is a positive cashflow of about $2.1 billion, equivalent to 0.5% of nominal GDP.