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Full OCR cut should be passed on: McLachlan

Co-Operative Bank led the field in cutting its floating interest rate following the OCR announcement but it wasn't a planned move to be first off the block, chief executive Bruce McLachlan says.

Friday, March 11th 2016, 3:10PM

"Our logic was to do the right thing for our customers which we believe there was no reason not to pass on that 25 base point cut to our customers. We didn't deliberately set out to be first, it was just out of the process that we normally do. It just so happens that others were slow rather than we were quick, I think," he says.

"We are small and nimble though. So we can, when we're surprised, we're able to get the people together quite quickly and make a good decision without having to go through a bureaucratic system which might take days.

McLachlan has described the OCR cut by the Reserve Bank Governor Graeme Wheeler as a "deliberate action to surprise the market."

"Why? He knows a bigger reaction will get the currency down. He's really desperate to get that down which is the key for him to re-balance the things he needs to get inflation to the level that's within his band." 

The currency was important to Wheeler, McLachlan says. 

"First of all it's about dealing with external balances between exports and imports. Certainly with our dairy price coming down so far that impacts our export. There's a risk that there needs to be a balance in that current account. So they would the really like the currency to be an offset to the dairy price fall.

"Secondly an over valued exchange rate depresses local prices. So one of the things that is keeping that, is keeping inflation below the bottom end of his band."

McLachlan says this week's cut will only strengthen the housing market.

"My personal view is the housing market is as strong across New Zealand as we've seen it for a very, very long time. Prices there are anecdotal stories everywhere which are not yet in the data. The market is incredibly strong and I think this is going to fuel that even more.

"The stock of houses is really low. Demand is really high and there is only one thing that can give and that's the price and that's what's happening," he says. 

 

Tags: OCR RBNZ The Co-operative Bank

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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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