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BNZ lifts long term mortgage rates; ASB cuts 6 month mortgage rate
Bank of New Zealand has announced it will increase its 4 and 5 year fixed mortgage rates by 10 and 29 basis points respectively to 6.49% and 6.69% respectively. This brings it into line with similar long term mortgage rate hikes announced in the last week by ASB and Westpac.
Our comprehensive mortgage rates table shows that only Kiwibank and ANZ-National have left their 3, 4 and 5 year rates around the 6.4-6.5% mark.
Meanwhile, in another sign of a steepening of the mortgage rate curve, ASB cut its 6 month mortgage rate to 5.8%, bringing it into line with the other big banks, but leaving it above BNZ's 'Classic' rate of 5.69%. although the BNZ rate requires a 20% deposit and the purchase of other BNZ insurance and credit card products.
See more detail and context in our updated Brother in Law's guide to mortgage rates.
all the big aussie banks
all the big aussie banks were were told to pass on the cuts, received many warnings from the Doc, they didn't listen and perhaps as a consequence those same banks now need all they money they can get their hands on with the IRD breathing down their necks in a very heavy manner.
losing billions / 15% of their equity in a now extra closely investigated tax sham is sure to put a hole in their affairs, and this is just the start of passing around the compulsory hat... perhaps Bollard isn't the toothless tiger we all see him to be, and has contacts in high places...
like watching the melborne cup we are calling out "go kiwibank go" and hoping like heck that even if it doesn't win the race it still effects the outcome before we all get to the final hurdle...
Bernard During the housing boom
Bernard
During the housing boom years 2003-2006 when median house prices rose over 14%PA, the average five year fixed rate was 7.6%. Now it's just 80bps below that average at about 6.8% (and since the start of this recession the average has actually been 8.7%!)
That's despite an average OCR of 6.3% during 03-06 compared to the current 3%.
Obviously there are other factors to consider (ie these are long term rates), but this does demonstrate that current rates are not as stimulatory as they appear and that that the Reserve Bank is really unable to adequately control actual retail interest rates via the OCR.
It's looking more likely that the Reserve Bank is going to be unable to really stimulate the economy without considering the unorthodox unorthodox (ie a little quantitative easing!) especially if RBNZ's expected economic boost from a lower dollar doesn't eventuate to the extent they are expecting.
Although I doubt if Alan Bollard - the man who cut the OCR to just 5% when house price inflation was 20%PA in 2003, citing the risk of SARS to the global economy and then was happy to leave retail interest rates at near 11% for 9 months into a recession - really has the courage or foresight to perform such a feat.