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Fixed-rate dip expected to be temporary

Fuseworks Media
Fuseworks Media

Wellington, March 24 NZPA - A dip in fixed-term mortgage rates is only expected to be temporary, despite being seen as an indication of increasing confidence in the stability of banks in this country.

In the past week or so banks have eased two-year fixed mortgage rates from about 7.5 percent to about 7.1 percent.

Massey University banking specialist David Tripe said the rate falls were due to New Zealand banks getting cheaper fixed-rate funding overseas, The Dominion Post reported.

It was about the perceived credit worthiness overseas of the banks in this country, Mr Tripe said.

The cost of borrowing overseas for the banks had dropped about 0.4 percent since November.

ANZ National Bank chief economist Cameron Bagrie said the dips in fixed rates were marginal and he expected they would rise, and would continue to rise on the back of a rising official cash rate later in the year.

Bank of New Zealand chief economist Tony Alexander disputed any suggestion there was any increased interest globally in lending to this country.

He said the drop in fixed rates was due to the Reserve Bank's decision this month to keep the OCR at 2.5 percent, pushing out expectations that a rise would not happen until mid-year.

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