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Negative OCR on the way: ASB and ANZ

ASB and ANZ have revised their forecast for the official cash rate and predict we will get negative rates next year. 

Tuesday, August 18th 2020, 8:44AM

The resurgence of Covid-19 in the community has prompted a rethink from the top four lenders.

The Reserve Bank pledged to lift the cap of its quantitative easing programme last week, while leaving the door open to negative rates once banks are ready to implement them.

ASB says the OCR will fall to -0.5% in April next year, potentially staying put until 2022.

The lender believes the Reserve Bank will also kick-start a direct lending programme to retail banks, lowering their borrowing costs.

ASB economists believe the Auckland lockdown will push the central bank towards lowering the OCR further.

"The recent return to lockdown conditions reinforces that risk to the RBNZ’s growth outlook," the ASB team, led by Nick Tuffley, said.

"The key message from the RBNZ last week was that they are prepared to pull out all the stops to get NZ interest rates lower and support the economy," the economists added. "The Bank’s quantitative easing programme was ramped up by more than anyone expected and the chances we see negative interest rates next year are now much higher."

ANZ also changed its forecast. The bank expects a 50 basis point cut to -0.25% in April 2021. "Beyond that, further easing is possible, but there are constraints on the OCR going below -0.75%," ANZ economists added.

Negative rates will lead to further downward pressure on retail interest rates and term deposits, though neither are expected to fall into negative territory as a result of a negative OCR.

ASB and ANZ join Westpac in predicting a negative OCR. BNZ gives a "50-50" chance of a negative central bank rate. 

Mortgage rates continue to plummet this week. TSB is the latest to slash rates, offering a one year fixed rate at 2.49%.

Tags: ASB OCR OCR forecasts

« Deferral scheme extended to MarchBNZ joins rivals with negative OCR forecast »

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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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