Mortgage lenders are cutting fixed rates as uncertainty builds about the strength of New Zealand's economic recovery and the OCR looks to stay low for longer.A total of twelve lenders have recently made cuts to their fixed-term mortgage rates, in contrast
Mortgage lenders are cutting fixed rates as uncertainty builds about the strength of New Zealand's economic recovery and the OCR looks to stay low for longer.
A total of twelve lenders have recently made cuts to their fixed-term mortgage rates, in contrast to the predictions by some economists that rates would continue to rise.
Financial have been playing a bit of a poker game with the Reserve Bank, which can often have just as much influence through speculation about its next move as it does with the actual decisions it makes.
For several months the OCR (official cash rate) has been sitting at a record low 2.5%, igniting a guessing game as to when Reserve Bank governor Dr Alan Bollard will start to hike the rate back towards a more historically normal level.
Now the banks seem to be comfortable that it will the stimulus tap flowing for
a while yet and this, combined with lower funding costs, is allowing them to cut fixed rates.
Last week saw a flurry of rate-cutting action that began with TSB Bank dropping its two-year rate six basis points to a market-leading 7.09% while also cutting its four-year rate 30 basis points to 8.20% and its five-year rate 15 basis points to 8.50%.
ASB and its subsidiaries Sovereign and BankDirect dropped their 18-month rates by 35 basis points, their two-year rates by 45 basis points and their three-year rates by 25 to 7.70%, equal lowest alongside PSIS, which has a four-year rate of 8.20%.
Among other lenders Kiwibank dropped its one-year rate 10 basis points to 6.15%, while SBS cut rates on all terms of one year or more.
And AMP dropped its three, four and five year rates to 7.75%, 8.20% and 8.50% respectively.
