SBS, CBS Canterbury hike fixed mortgage rates

SBS, CBS Canterbury hike fixed mortgage rates

The latest round of fixed mortgage rates hikes continued this morning, with SBS Bank and Building Society CBS Canterbury hiking rates. Fixed mortgage rates are rising again with markets picking the Reserve Bank of New Zealand (RBNZ) may be forced to raise the Official Cash Rate (OCR) sooner than 'the latter part of 2010', which it has indicated in its four previous OCR statements. Wholesale interest rates are also on their way up, with longer term year swap rates hitting their highest levels this year. SBS raised its three year mortgage rate by 10 basis points (bps) to 7.9%; and its five year rate by 5 bps to 8.75%. SBS's new three year rate sits below standard rates offered by ANZ (7.99%), ASB, BNZ and National Bank (7.95%). Its new five year rate is at the top of the range offered by banks in New Zealand and is equal to standard rates offered by BNZ and ASB. CBS Canterbury raised all of its fixed mortgage rates, including its six month rate, by between 15 and 26 bps. Its six month rate was raised by 16 bps to 6.25%, while at the other end of the curve its five year rate was raised by 15 bps to 8.85%. See and compare all mortgage rates here.

Bank economists are picking the Reserve Bank will keep the OCR at its record low of 2.5% but drop the 'low till late 2010' phrase in its OCR statement tomorrow morning. Indicators such as consumer and business confidence have jumped in the past month and markets are picking OCR hikes as early as January next year. However, Prime Minister John Key yesterday pre-empted the RBNZ's statement, telling a Dow Jones reporter he expected the Reserve Bank would not raise the OCR until mid 2010 at the earliest if the New Zealand dollar remained strong. Westpac economists yesterday warned borrowers not to wait 'until they see the whites of the Reserve Bank's eyes' before locking in a fixed mortgage, with fixed rates clearly on their way up again.

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