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Mortgage rates pushing higher
August 8th, 2009Both ANZ and the National Bank have now raised their long term fixed mortgage rates, following recent rate rises by ASB, BankDirect and Sovereign.
Basically, rates for fixed terms of 2 to 5 years have risen between 0.20% and 0.50%.
A short-term gap has opened up between the institutions that have moved, and those that are yet to move. There is currently a rate advantage with BNZ, Kiwibank, and Westpac. It is unlikely to last very long, given previous patterns of rate changes.
However, the timing and amount of these increases does raise a question about what is driving them.
It does not appear to be local wholesale market rate movements.
Subscribers to our free “just the facts” service have access to special charts that track bank mortgage rate averages with both wholesale swap rates, and with benchmark government bond rates.
Regular users can see these wholesale rates and benchmark rates charted here and here.
These perspectives clearly show that, to date, there has been no – that is zero – pressure to raise rates emanating from the local wholesale money markets.
More likely, the pressure has come from the margin cost of offshore fund raising the banks have been doing recently. However, those costs will fall unevenly on the banks that have done this type of funding and capital-raising. Margins for access to this foreign funding have varied between banks, and there is now the added cost of the government guarantee where it has been used. These margins and costs will pressure some banks more than others to raise the cost of their lending.
Another pressure on bank profits is the recent moves by the Australian-owned ones to let go of juicy dishonour and honour fees. These concessions will have a noticeable effect on bank’s bottom-lines, and general pressure will be on to mitigate the impact of the fee rollbacks.
The latest mortgage rates for all institutions are listed here >>
Tags: ANZ, ASB, Banks, BNZ, Kiwibank, Mortgage rates, National Bank, swaprates, Westpac
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August 8th, 2009 at 10:28 am
Up they go, hippity hop, all the way, right to the top. And we have yet to see the full impact of the madhouse govt borrowing overseas, all that splurging by pollies desperate to stay in power least they too become unemployed. Throw in Noddylands own gargantuan mountain of debt being built by the govt, to be funded through the sale of IOU paper, which must add even more to the shortage of credit on the corporate front. Oh yeah, we said it was coming, we knew it was coming but we carried on borrowing heaps and heaps from the oh so friendly banks to throw at price bloated property. Now the stuff will hit the fan and splatter everywhere.
August 8th, 2009 at 11:06 am
Wally,
the sooner the better