Rate falls shortlived

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Sunday 18 April 2004

The sharp falls in two and three year mortgage rates which started several weeks ago have stopped as quickly as they began.

By The Landlord

During the past week many lenders have increased their rates, in some cases more than 25 basis points.

Bank of New Zealand again attracts the most attention as it is the bank which led rates down and is the only bank not to have put them up last week. Also the bank ran, what some may say is, a provocative ad in a Sunday paper, claiming now it’s got rid of brokers it’s got its rates down.

Currently only a handful of players (the likes of BNZ, Kiwibank, PSIS, BankDirect and HSBC) have their two year rates under the 7.00% mark.

The main reason for the rate hike is that long term rates in the United States have risen on the back of strong economic data. As a result US 10-year bond yield has gone from 4.15% to 4.37%.

Another interesting feature of the week is that many lenders took the unusual move of changing their rates twice within a week.

Floating rates remained unchanged during the week and range from a low of 6.80% to 7.95%, with the bulk of lenders clustered around the 7.40-7.50% mark.

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