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Mortgage Rates Daily Commentary
Thursday 28 November 2024  Add your comment
Sizeable OCR cut expected in Feb; Banks rush to cut rates after RBNZ'S decision yesterday

Another 0.50% drop in the OCR is expected from the Reserve Bank in February. [READ ON]

The Reserve Bank has cut its official cash rate (OCR) to 4.25%, in line with most economists' expectations, and says it's likely to cut further next year. ASB Bank and Kiwibank immediately published cuts in their lending and deposit rates while Bank of New Zealand swiftly followed. [See here]

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Why the Reserve Bank cut the OCR today

Reserve Bank governor Graeme Wheeler explains why the Official Cash Rate was cut today.

Thursday, July 23rd 2015, 9:02AM

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.0%.

Global economic growth remains moderate, with only a gradual pickup in activity forecast. Recent developments in China and Europe led to heightened uncertainty and increased financial market volatility. Particular uncertainty remains around the impact of the expected tightening in US monetary policy.

New Zealand’s economy is currently growing at an annual rate of around 2.5%, supported by low interest rates, construction activity, and high net immigration. However, the growth outlook is now softer than at the time of the June Statement. Rebuild activity in Canterbury appears to have peaked, and the world price for New Zealand’s dairy exports has fallen sharply.

Headline inflation is currently below the Bank’s 1 to 3% target range, due largely to previous strength in the New Zealand dollar and a large decline in world oil prices. Annual CPI inflation is expected to be close to the midpoint of the range in early 2016, due to recent exchange rate depreciation and as the decline in oil prices drops out of the annual figure. A key uncertainty is how quickly the exchange rate pass-through will occur.

House prices in Auckland continue to increase rapidly, but, outside Auckland, house price inflation generally remains low. Increased building activity is underway in the Auckland region, but it will take some time for the imbalances in the housing market to be corrected.

The New Zealand dollar has declined significantly since April and, along with lower interest rates, has led to an easing in monetary conditions. While the currency depreciation will provide support to the export and import competing sectors, further depreciation is necessary given the weakness in export commodity prices.

A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely.

Tags: Mortgage Rates OCR

« Banks hit LVR brakesOCR cut to 3% »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build ▼4.94 - - -
AIA - Go Home Loans ▼7.49 5.99 5.69 5.69
ANZ ▼7.39 ▼6.39 ▼6.19 ▼6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼5.79 ▼5.59 ▼5.59
ASB Bank ▼7.39 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 ▼7.54 - - -
BNZ - Rapid Repay ▼7.54 - - -
BNZ - Std ▼7.44 5.99 5.69 5.69
BNZ - TotalMoney ▼7.54 - - -
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 ▼6.95 5.99 5.75 5.69
Co-operative Bank - Standard ▼6.95 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 8.60 ▼6.65 6.40 -
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 ▼7.25 6.89 6.59 6.49
Kiwibank - Offset ▼7.25 - - -
Kiwibank Special ▼7.25 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 ▼8.19 6.49 6.49 6.49
TSB Special ▼7.39 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 6.05 5.79 -
Westpac ▼7.39 ▼6.39 ▼6.09 ▼6.19
Westpac Choices Everyday ▼7.49 - - -
Westpac Offset ▼7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼5.79 ▼5.49 ▼5.59
Median 7.54 5.99 5.79 5.69

Last updated: 28 November 2024 9:27am

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