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Co-operative PSIS hikes two, three, four-year mortgage rates by 10-20 basis points

Co-operative PSIS hikes two, three, four-year mortgage rates by 10-20 basis points

PSIS has raised its two, three and four-year mortgage rates by between 10 and 20 basis points.

The co-operative raised its two-year rate by 10 bps to 6.45%, its three-year rate by 10 bps to 6.95%, and its four-year rate by 20 bps to 7.30%. The new rates are effective immediately.

See and compare all mortgage rates on our rates page here.

The rises follow jumps in swap rates over the last two weeks (see chart below) as markets brought forward their forecasts for when the Official Cash Rate would increase. The majority of economists are now saying the Reserve Bank would definately hike the OCR before the year is out, with increasing speculation of a September or October increase.

BNZ head of research Stephen Toplis last week went as far as to say Reserve Bank governor Alan Bollard had all the evidence he needed to hike the OCR this Thursday.

BNZ researchers Mike Burrowes and Kymberly Martin discuss the surge in swap rates here.

See Bernard Hickey's latest view on where mortgage rates are heading here.

(Updates with swap rates comments).

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8 Comments

Yeah...so....and what about the deposit rates...hah!

The psis is a nice outfit...but why should savers subsidise the splurgers?

I just can't understand why interest rates should be rising..it's not as though we have a world debt crisis..is it?....and billions about to be lost on piigs defaults?....and Obamaramaland about to sink into the effluent?...didn't the pollies tell us everything would be in recovery mode by now...didn't they!

Wolly - interest rates have everything to do with inflation, not growth, and everywhere you look in the world you're seeing plenty of it. Not only the strongly growing economies, but the low or no growth highly indebted western countries where inflation rates are 3.50 - 4.50% already, and rising still. In addition to a deteriorating oil demand/supply situation, and wether impacts, the world is paying the price for money printing to cover debt irresponsibility in the West, and money printing in the east to keep the Remimbi pegged to the US Dollar,

There is a price to pay and its called stagflation, and if you keep rates too low for too long, and inflation gets away on you, you get MUCH higher rates and deflation that kills us all. Already NZ's inflation rate has started to to surprise on the upside over and above what GST, ACC & the ETS costs permitted as one-offs - no surprise really and eventually only one solution.

There are actually several solutions, Grant. But not many ( none!) that are palatable. But here's one thing that's 'different' this time. Our ages. In the 70's we had low private debt; wages could rise and debt take up the slack. In the 80's we were just accummulating moderate private debt; much of that evapourated with October 29th 87. In the 90's we took on more personal debts and saw some of it go West with the internet bubble crash...and by then we were 30 years older. Today, 40 years older, and facing 'the end' of our working capacity, we have exhorbitant personal debt (and saw much 'wealth' go with the finance companies,leaky home and earthquake); little likely hood of wage rises or asset appreciation ( your growth example) and, to me, only one solutio ~ Deflation, not inflation, as older, poorer retirees ( more everyday) need to sell up to live, and make the most of whatever purchasing power they still have left. The alternative? Massive Government support of a poor eldery class. And that, NZ, cannot afford.

In fact I totally agree with you on that Nicholas when you look out medium to long-term, its just that I have little faith that in the short term central bankers in the US & europe will permit that to happen until they get to a point of no choice. I believe they will attempt to keep the system afloat as long as they can at the expense of inflation, and then we get a deflationary collapse (hopefully a lesser collapse here but that's a possiblity). My positioning is to survive the inflationary period, then to take advantage of the deflation later, the problem being, how much later ? No one knows, hell we're still debating what comes next.

That's what makes a market; different views! I, on the other hand, subscribe to the Albert Edwards story. We will ultimately get inflation, only after a cleansing bout of deflation, first; inflation from a lower base that is 'affordable'.

 

One of the real issues I have with Bernard's views is his insistance that floating is best. Yes he agrees rates will head higher, but not sufficiently to favour fixed over floating, even although the swap curve is curently priced well under both economist and RBNZ forecasts.

And frankly its not about what you think, its about risks - the downside risks are small, the upside risks large and unforecastable in this environment, despite all the adamant opinion. There's little consolation to a niave borrower from an apology from a commentator that they've listened who has ignored the risks, and only focused upon their forecast that he/she has no perfect foresight to make.

Hurry, interest rates are going up, borrow now and secure the low rates while you can!!

Banks want people to borrow to buy houses, hence creating this urgency.

Days to the General Election: 28
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