Mortgage rate commentary: Little action

With just over a week to go before Reserve Bank governor Alan Bollard reviews where interest rates should be none of the banks have passed on his last rate cut on April 30 into their floating mortgage rates.

Wednesday, June 3rd 2009, 9:31AM

by Jenny Ruth

Bollard cut his official cash rate (OCR) 50 basis points from 3% to 2.5%. Traditionally, banks' floating rates have been about 200 basis points higher than the 90-day bank bill rate, currently 2.71% but the four major home lending banks' rates remain between 6.4% and 6.49%.

Bollard will review the OCR, which directly influences the 90-day bank bill rate, on June 11.

However, mortgage lenders continue to chip away at their six-months and one-year fixed rates. The latest to move were Public Trust, which cut its six-month rate 44 basis points to 5.4% and its one-year rate by 19 points to 5.5%, and Southern Cross, which cut its six-month and one-year rates by 20 points each to 5.49%.

Westpac has the lowest six-month rate at 5.39%, having cut it a couple of weeks ago while Southern Cross' one-year fixed rate is now equal lowest in the market with Westpac's.

But longer-term mortgage rates, which are determined more by global interest rates rather than anything Bollard does, continue to creep higher. A week ago, ANZ and National Bank raised their three-year rate 10 points to 6.85%, their four-year rate by 25 points to 7.4% and their five-year rate by 35 points to 7.85% -- the latter has increased 110 points since the beginning of April.

SBS has now matched ANZ National's five-year rate, having raised its rate by 25 points. General Finance/Cairns Lockie has also raised its three, four and five-year rates by 10, 25 and 35 points respectively to 6.95%, 7.5% and 7.95%.

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