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Mortgages

Mortgage Rates Daily Commentary
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Rise in households struggling with mortgage repayments; RBNZ: house prices still near top of sustainable levels

Mortgage arrears continue to rise but are still low by historical levels. [READ ON]

The Reserve Bank says house prices remain near the top of its estimate of sustainable levels and remain “a stretch” for many would-be buyers. [See here]

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Mortgage pain coming

Be clear, very clear; interest rates are set to start rising

Thursday, December 12th 2013, 12:19PM 1 Comment

While the Reserve Bank left its official cash rate unchanged today it has made it clear they will start rising next year.

Reserve Bank governor Graeme Wheeler said today that he expects the official cash rate to rise 2.25% over the next nine quarters.

When interest rates start rising people will feel them.

Wheeler says that 75% of mortgages are either on floating rates or fixed rates of less than 12 months.

“When Monetary Policy does start tightening these mortgage costs have the potential to start biting,” he said during a media conference following today’s OCR announcement.

Wheeler said the bank had no intention of raising rates today, but there are factors, particularly around inflation and house process it is watching carefully.

“We didn’t consider a rate hike today. We didn’t think it was appropriate.”

While the RBNZ hasn’t indicated when the OCR will rise, it said in its statement today, that “the bank will increase the OCR as needed in order to keep future average inflation near the 2% target midpoint.”

The consensus view amount economics is that’s March is the most probable time for the first increase.

“We continue to expect the first OCR hike will come in March next year,” ASB chief economist Nick Tuffley says.  “The risks around that call look more balanced than our thoughts going into the MPS.  The RBNZ has already incorporated into its forecasts two factors we saw that could delay the start of the OCR cycle: a later pick-up in residential constructions and a lower peak in house price growth.

One thing that changed in today’s announcement is that the 90-day interest rate track implies a similar start to the September forecasts; that is March/April 2014. 

However, the end point for the 90-day outlook is marginally higher at 4.8% compared to 4.7% earlier. 

“The added emphasis the RBNZ has put on achieving the 2% target band mid-point, which led to the lower inflation forecasts, likely contributed to this upward revision at the margin given the extra wiggle room the higher TWI outlook gives the RBNZ,” Tuffley says.

« OCR held, but for how long?Carve out of new builds not a back-down: Wheeler »

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Comments from our readers

On 19 December 2013 at 11:21 am AFA Muggins said:
Quite obviously the Reserve Bank will increase the OCR, as they follow the lead from the trading banks who have been raising their rates through 2013.

There seems to be a well proven historical basis that there is a disconnect between the OCR and banks moving on mortgage rates.

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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 ▼6.39 ▼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 8.50 ▼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 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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