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Expert's Views

Some explanations from BNZ

BNZ's Tony Alexander explains why RBNZ and politicans are wrong, why the next OCR movement will be upwards and what to do now.

Friday, June 19th 2009, 9:17AM

Expert views ends this week with another good piece from BNZ chief economist Tony Alexander. In his Weekly Overview Alexander explains why the argument from politicians and the Reserve Bank over funding of home loans are wrong.

He argues that the OCR is irrelevant to where banks source their home loan funding. The argument makes sense but is curious as the banks have always moved their home loan rates in tandem with OCR movements.

That bit he doesn't explain.

The other piece of information Alexander imparts is that he predicts the next OCR adjustment will be upwards. The easing cycle is over. The good news is that this increase is sometime next year, he predicts, but it will be earlier than the RBNZ currently suggests.

As usual he gives his views on rates and which ones to go for. Here he is in line with other economists - fix short.

Read Full Weekly Overview here

 

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Future interest rate hikes softened

The Reserve Bank has kept the OCR at 2.50% as expected, but had lowered its forecast track for the 90 day bill rate by around 60 basis points (0.6%) to a peak of 4.30% by the end of next year.

For borrowers that means floating home loans are not forecast to rise as much as previously forecast. In June the expectation was that the rates would rise 2% in the next 12 months: that figure has now been wound back to 1.4%.

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Disclaimer: Every possible effort has been made to keep the information in the rates tables as accurate as possible, however, neither the publishers of Mortgage Rates nor anyone engaged to compile these tables accept any liability for inaccuracies or any loss suffered as a result. It is strongly advised that readers check loan details directly with the provider concerned.

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