Commercial

RBNZ finally gets a response

If ASB had not kicked off mortgage rate increases yesterday, then the Reserve Bank would have started thinking in terms of boosting the Official Cash Rate (OCR) 0.5% in July simply to force the response it wants, says BNZ economist Tony Alexander.

Friday, June 18th 2010

In the BNZ Weekly Overview he points out that the Reserve Bank last week raised the cash rate from 2.5% to 2.75% with the explicit intention that banks raise lending rates - otherwise nothing has changed apart from reduced bank margins.

The Reserve Bank almost certainly won't have to do that now that increases have started and BNZ expects a 0.25% move in five weeks time.

As for what borrowers should do - the raw numbers say fix one to three years. But Alexander says it is a big ask to jump into a three or even two year rate from current still low floating rates.

There is also a risk that the Reserve Bank does not raise rates as rapidly as BNZ has pencilled in given risks in Europe and the chance the current unwillingness of households to borrow remains for another year or two.

"So it is really still the toss of a coin with awareness needed that there is absolutely no canny thing a person can do to avoid higher financing costs over the next three years," says Alexander.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

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