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BNZ, TSB hike six month mortgage rates ahead of RBNZ OCR decision
December 9th, 2009BNZ has raised its six month mortgage rates in a move that takes them above the bank’s lowest variable rate. Fixed mortgage rates have been rising in recent months, while variable rates have been stable as the Reserve Bank keeps the Official Cash Rate at its record low of 2.5%.
BNZ raised its Standard and Fly Buys six month mortgage rate by 25 basis points to 5.75%. It also raised its Global Plus rate by 25 bps to 5.85%. BNZ currently has its TotalMoney variable rate at 5.59%, giving the bank a ‘positive’ mortgage rate curve where variable rates are the lowest on offer and longer term rates are the highest.
The move in the mortgage rate market to a positive rate curve is the opposite to what has been seen in New Zealand over much of the last decade. The effect of having low variable and short term rates compared to higher long term rates has seen more borrowers move to shorter term and variable offers from banks. Economists have noted that this gives the Reserve Bank’s OCR much more potency because any OCR change flows through to home owners much quicker.
Meanwhile, TSB also hiked its six month mortgage rate by 25 bps to 5.75%.
Westpac currently has the lowest six month mortgage rate on offer out of the main banks at 5.49%. HSBC is also offering this rate, but conditions apply such as the loan must be above NZ$500,000. National Bank is offering 5.7%, ANZ 5.99%, while ASB and SBS are offering 6%. Kiwibank is offering 5.75% for a six month mortgage rate.
See and compare all mortgage rates here
The next big event that could have an impact on interest rates is the Reserve Bank’s Monetary Policy Statement and OCR update on Thursday morning. Markets will be watching closely for any hints that the RBNZ may be looking to raise the OCR sooner that the second half of 2010. The RBNZ has said since the end of April that it expected to keep the OCR at or below its current level until the latter part of 2010.
The wording changed slightly in its latest MPS at the end of October to: “we expect to keep the OCR at the current level until the second half of 2010″.
Tags: BNZ, Interest Rates, Mortgage rates, OCR, Official Cash Rate, RBNZ, Reserve Bank of New Zealand, TSB
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December 9th, 2009 at 11:10 am
fixed are just going to be sky high by the time my loans roll over later next year. just hope the floating rate doesn’t explode upward once the brakes are taken off, but it just has to doesn’t it…
December 9th, 2009 at 11:16 am
Oh yeah POP …you got that right…the fun will begin as the US starts to borrow every dollar on the planet to pay the bills on borrowing almost every dollar on the planet!!
December 9th, 2009 at 1:28 pm
They are rising rates ahead of OCR decision. But they know OCR will stay unchanged for another 6 mths anyway, and same happened last time. How much profit they are making is outrages. Central bankers favourite son must be delighted
December 9th, 2009 at 2:32 pm
Lyal…only floating rates are moved by the ocr….Bollard is approaching the time when he will be forced to raise the rate. Stevens over the ditch is on to it. We will need to be steeper and higher for longer…There is no way out..no escape from higher rates..available credit fails to meet future demand..go check out the annual US debt repayment costs estimates for the next twenty years…they want all the credit out there!!!…this explains why Treasury are borrowing twice what they planned…trying to get all they can, while they can.
December 9th, 2009 at 2:45 pm
From Australia’s Consumer Confidence Index figure out today:
“…We(stpac) expected that there was a real possibility that the index would fall much more sharply than the 3.8 per cent which it has registered,” Mr Evans said in a statement.
“With households now holding even more debt relative to their incomes we expect that we must be getting close to levels of the variable mortgage rate where households will become much more sensitive than is currently the case.”
December 9th, 2009 at 3:32 pm
Wally , floating rates are around 6% at the moment, and OCR is 2.5%. It’s a huge gap, In aussie OCR is 3.5 and rates about same as ours. And we are talking about same banks.
December 9th, 2009 at 7:25 pm
lyal – forget the OCR, it’s going to become irrelevant. Rates are at their lowest in history, yet debt levels and risk are arguably the highest in history. This equals much higher interest rates in the coming years, no question. Remember, the central bank does not create real capital (that happens through old-fashioned work and thrift). People/banks/creditors will not lend at low rates when default risks are rising rapidly and capital gains are likely to turn negative before long. Any rational lender going forward will be probably end up demanding double-digit returns – and this is no exaggeration, trust me. Govts and central banks know this – hence the epic battle that is currently going on. They want to “print” more to make the problem go away, but we all know that the results of that will be far worse than raising rates. They are stuck between hell and a hard place. Property prices are as good as they’ll get for years, if not decades, to come. If you’re over-indebted then sell up as fast as you can.
December 9th, 2009 at 7:39 pm
I agree with Ludwig Lyal…more to the point the chatter across the ditch is about rates rising throughout 2010. Who will deposit money here, when they can put it in an account in aus and earn more with less risk. That move has been under way for months. It explains why rates are higher here.
December 9th, 2009 at 7:44 pm
Where they are going is up and how far will be too far. That’s Noddyland for you. The critical mistakes were made years ago by fools and stupid people in the Beehive. Little has changed. Anyone with mortgage debt who can pay down the principal is silly not to. Those entering banks asking for loans so they can buy property are just bloody fools. The wise are hunkering down debt free with capital offshore and safe from Beehive stupidity.
December 9th, 2009 at 8:03 pm
Whos gonna be next for the downgrade after Greece?Not us I bet.!!How the hell are we pulling the wool(no pun intended)over everyones eyes?
December 9th, 2009 at 8:28 pm
I bet the recent 5 and 7 year bond issues are getting few takers. I would want 18 to 20% to invest for 7 years.
December 10th, 2009 at 4:41 pm
OCR remain unchanged.
Are they now going to revert rates to pre-OCR level?