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Banks Move To Lower Mortgage Rates Since OCR Statement

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 12 NZPA - A fall in mortgage rates which started with last week's Reserve Bank statement has now seen a widespread move by banks to lower rates.

A standard two-year fixed rate of 9.2 percent is now common.

Last Thursday Reserve Bank (RBNZ) governor Alan Bollard said the central bank was likely to be in a position to lower the Official Cash Rate (OCR) later this year.

That same day Westpac and ASB Bank announced they were cutting fixed home lending rates.

Westpac mortgage rate cuts ranged from 0.1 percentage point to 0.4 points, with the two-year fixed rate falling 0.2 points to 9.2 percent.

"This realignment of rates is in response to the sentiments expressed by the RBNZ in today's OCR announcement and the resulting drop in wholesale rates," Westpac spokesman Craig Dowling said at the time.

ASB also cut its two-year rate by 0.2 points to 9.2 percent, and lowered some other rates by 0.05 points to 0.4 points.

Today, Westpac general manager product manager David Cunningham said the benefits of "fairly significant reductions" in medium and longer term wholesale interest rates had been passed onto customers.

But he was also cautious about future moves lower.

"I would say that the wholesale market is presently anticipating most of the interest rate moves that are going to happen over the next six to 12 months, so I wouldn't think longer term housing interest rates will fall particularly significantly," he told Radio New Zealand.

TSB chief executive Kevin Rimmington said that with people not borrowing to the same levels as previously, banks were looking around to increase their lending portfolios, for which they needed a "sharp rate".

"The money is pouring into banks, but to get it back out again it's necessary to be competitive."

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