Kiwibank has lowered its three, four and five-year fixed mortgage rates, keeping them to around the same level as those of the major banks but the lower rates are not necessarily seen as giving a boost to the faltering housing market.Last Thursday Kiwiban
Kiwibank has lowered its three, four and five-year fixed mortgage rates, keeping them to around the same level as those of the major banks but the lower rates are not necessarily seen as giving a boost to the faltering housing market.
Last Thursday Kiwibank led the other banks in reducing its two-year rate, cutting it to 6.99% from 7.%.
Within hours, sister banks ANZ and National announced cuts to their two-year rates, and also to their three to five-year rates.
Today Kiwibank said it was dropping its three-year rate from 7.7% to 7.25%, its four-year rate from 8.2% to 7.55%, and five-year from 8.5% to 7.75%.
In its Market Focus note today, ANZ said global interest rates edged lower last week, led by the US two-year Treasury bond, whose yield fell to a record low.
Global long term interest rates were also moving lower, placing downward pressure on New Zealand interest rates, ANZ said.
During the past week fixed mortgage rates from all the major banks had fallen, and ordinarily that would be expected to kick start the housing market.
"But with the variable rate hovering at about 6%, a larger portion of mortgage debt at shorter maturities and earnings growth within the economy near cyclical lows, it may not necessarily signal a return to business as usual nor should it really change borrowing behaviour," ANZ said.
A key area to monitor would be deposit rates. If offshore funding costs continued to rise, financial institutions would have even more incentive to grab local deposits.
That "pie" was not large and deposit rates would have to go up, ANZ said.
"This could result in higher borrowing rates in future, but the fall we have seen in wholesale markets last week seems to be dominating for now."
