It looks like this is moving week for both home loan and term deposit rates, following the RBNZ MPS. ANZ the next to cut retail rates although the changes are not major

So have we passed the peak? Downhill from here?

Or maybe it is wishful thinking to try and get  house prices rocketing up again, which seems to be a major way NZers increase their wealth. I heard one property expert at the weekend say that a 1% drop will result in a 10% house price rise, and a 2% drop will be a 20% increase. That is something no 1st home buyer would want to hear, as you potentially get into less debt with lower house prices,  by having the current higher interest rates inplace.

Someone who’s saving $20-40 per week will probably care. More than the govts promised tax cuts. 

They are a bit sad considering Orr has implied there will be a cut later this year. I took a much cheaper advertised 1 year rate 9 months ago and the OCR was the same. 

8.5 at KB for floating. But their 1 year rate was quoted at a pretty competitive 6.89.

ANZ gave me 1 year at 6.89% on Friday

I got 6.99% from Westpac for 12 months plus $1600 cash back a few weeks back, equivalent of 6.7%

Define a "Proper Drop". OCR may only come down 50bps to 5.0% and that could be the "New Normal". The way the world is trending a rates rise has as much chance of happening as a rates fall, its hardly stable out there.

This is what Milton Friedman called the interest rate fallacy, and it indeed refuses to die. We can tell what monetary conditions are in the real economy, as opposed to financial liquidity, though the two can be linked, by the general level of interest rates. When money is plentiful, interest rates will be high not low; and when money is restricted, interest rates will be low not high. The reason is as Wicksell described more than a century ago:

[The natural rate] is never high or low in itself, but only in relation to the profit which people can make with the money in their hands, and this, of course, varies. In good times, when trade is brisk, the rate of profit is high, and, what is of great consequence, is generally expected to remain high; in periods of depression it is low, and expected to remain low.

When nominal profits are expected to be robust, holders of money must be compensated for lending it out by higher interest rates. Thus, the same holds for inflationary circumstances, where nominal profits follow the rate of consumer prices. During the Great Inflation, interest rates weren’t low at all, they were through the roof well into double digits and higher by 1980. At the opposite end in the Great Depression, interest rates were low and stayed there because, as Wicksell wrote, the rate of profit was low and was expected to be low well into the future. High quality borrowers were given as much money as they could want while the rest of the economy was deprived of funds; liquidity and safety being the only preferences in what sounds entirely familiar. Link

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