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Current swap rates docile

The following two graphs show you what has been happening to swap rates recently. Swap rates are important as they indicate the cost banks are paying for money to fund their home loans.

Thursday, August 6th 2009, 5:32PM

90day bank bills

Two of the most important indicators to understand where short term home loan rates are sitting and where they may head are the official cash rate and the 90-day bank bill rate.

The graph on the right, NZ short-term rates, shows that the OCR has been flatlining at 2.50% recently and 90-day rates have stayed pretty static.

This indicates direct costs for funding short term home loans are stable and interest rate changes unlikely.

 

 

 

This second graph looks at a range of swap rates for longer terms.

These have been drifting higher which suggests home loan rates for equivalent terms may move up too.

 

 

 

 

 

 

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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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