News

Rates could be on hold for four years

The Government's housing reforms will cause a fall in the housing market that could delay official cash rate hikes until 2025, according to Westpac economists.

Tuesday, April 13th 2021

Michael Gordon

The bank had previously tipped a 20% year on year increase in house prices through 2021, but has dramatically revised its position after the Government's clampdown on investors.

Following the investor reforms, the bank expects house prices to "flatten off over the rest of this year, with a gradual decline in the following years as longer-term interest rates rise. This has implications for spending, activity and inflation, and will further delay the timing of OCR hikes."

The team said low mortgage rates would help first home buyers remain in the market for now, meaning there wouldn't be a "substantial fall".

The "sizeable downgrade" for the housing market has implications for the bank's economic forecasts. It expects household spending to recover more gradually than previously expected. 

Westpac's team, led by Michael Gordon, predict no movement on the central bank rate for the next four years. 

"The downgrade to our activity outlook means we expect it will take even longer for the Reserve Bank to achieve its inflation and employment goals on a sustained basis. We previously had no OCR hikes until early 2024; we have now pushed that out to early 2025."

The forecasters predict that long-term rates will begin to rise before then, "pulled higher by global forces", but believe holding the OCR close to zero will "stem the tide".

Westpac expects the Reserve Bank to stress its "up or down" guidance for interest rates as it publishes its latest Monetary Policy Review tomorrow. 

Comments

No comments yet

Heartland Bank - Online 1.85
HSBC Premier 2.19
HSBC Special 2.25
Kainga Ora - First Home Buyer Special 2.25
ICBC 2.35
SBS Bank Special 2.49
TSB Special 2.55
ANZ Special 2.60
China Construction Bank Special 2.65
The Co-operative Bank - First Home Special 2.65
The Co-operative Bank - Owner Occ 2.85
Heartland Bank - Online 2.35
HSBC Premier 2.45
China Construction Bank Special 2.65
ICBC 2.75
Resimac 2.79
SBS Bank Special 2.89
TSB Special 2.95
Select Home Loans 2.99
Bluestone 2.99
ANZ Special 2.99
Kiwibank Special 3.15
China Construction Bank Special 2.99
HSBC Premier 3.19
Select Home Loans 3.54
Bluestone 3.54
Resimac 3.54
ICBC 3.75
SBS Bank Special 3.79
TSB Special 3.99
BNZ - Classic 3.99
Kiwibank Special 4.19
Kainga Ora 4.22
ANZ Blueprint to Build 1.68
ASB Back My Build 1.79
Heartland Bank - Online 2.25
Resimac 3.39
Bluestone 3.49
Select Home Loans 3.49
ICBC 3.69
Kiwibank Special 3.75
Kiwibank 3.75
Kiwibank - Offset 3.75
The Co-operative Bank - Owner Occ 4.40

More Stories

Rent levels countrywide

Friday, September 24th 2021

Rent levels countrywide

Median rent levels around the country have been examined in the latest Regional Property Insights report by independent economist Tony Alexander and First Mortgage Trust.

Investors continue to shy away from buying more property

Thursday, September 23rd 2021

Investors continue to shy away from buying more property

A net 56% of mortgage advisers are seeing fewer investors stepping forward for mortgage advice, data from the First Mortgage Trust and Tony Alexander September survey shows.

Rents remain at all-time highs

Friday, September 17th 2021

Rents remain at all-time highs

Nationally rents remained at an all-time weekly high of $550 in August despite the country entering a nationwide lockdown.

What office staff expect in a workplace

Friday, September 17th 2021

What office staff expect in a workplace

The office is no longer a place to be anchored at a desk whilst trying to block out the background buzz to meet deadlines.