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Rate rise expectations anchored

Weekly home loan report: Continued high inflation expectations and further Reserve Bank rhetoric on the need to slow the domestic economy have anchored expectations for a rate rise next week.

Tuesday, November 29th 2005, 7:08AM

by Janine Ogier

But dire predictions for the economy in coming months have quelled a bit of the talk of more tightening in January.

Fixed home loan rates edged on upwards in the last week and when the expected central bank tightening occurs on December 8, floating rates will join the action again.

The National Bank business survey showed one-year ahead inflation expectations rose at the same time as firms’ activity expectations slipped to zero, underlining the pessimistic business confidence outcome.

ANZ Bank economists said the economy might contract in the fourth quarter of this year or the first quarter of 2006, but the Reserve Bank would still act next month against inflation, especially against a background of a tight labour market.

“However, we believe the degree of economic weakness and higher effective mortgage rates reduce the prospects for a further move in January,” they said.

Deutsche Bank senior economist Darren Gibbs believes the additional weakness shown in the survey’s real economy indicators was likely driven by the October rate hike and RBNZ Governor Alan Bollard’s public statements lambasting New Zealanders’ borrow to spend attitude.

The survey suggested the RBNZ would be successful in slowing the domestic economy if it validated the expectations of higher interest rates that are now embedded in household, business and market expectations, Gibbs said.

In a post-election briefing to the Government, Bollard reiterated comments about the danger to the economy presented by New Zealanders’ attitude to debt and a lack of savings, which was analysed as being another blatant hint of a December cash rate hike.

Fixed home loans moved further up over the week as lenders tinkered, but floating rates were stable. One-year rates now range from the 7.60% offered by Southern Cross to 9.10% from GEM Home Loans. Fifteen lenders surveyed by www.goodreturns.co.nz raised their rates.

For two-year fixed terms, Housing Corp. sets the lowest rate at 8.00% and Headstart’s 8.95% marks the top. This narrow band of rates is centred around the 8.25% and 8.30% level where the major banks sit.

There were 16 upward changes from lenders in the two-year market.

Three-year rates vary from the 7.95% offered by PSIS and Housing Corp to Headstart and Westpac’s capped rate of 8.85%. Again, there were 16 revisions upwards.

The number of lenders moving higher in the five-year fixed terms could be counted on two hands for the first time in a while – nine increased rates. The 7.70% offered by Housing Corporation and Kiwibank is still the low mark, while GEM Home Loans’ 8.60% is the highest.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society ▼8.10 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.07 5.79 5.69

Last updated: 4 November 2024 9:31am

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