Flurry of cuts to two-year rates

Friday, November 19th 2010, 11:23AM

There has been a flurry of interest rate changes this week afetr a quiet month, with four lenders (Public Trust, Napier Building Society, Kiwibank and TSB) dropping two-year rates following BNZ's move last week  to drop its two-year rate to 6.65%.

Public Trust is offering the lowest fixed rates for a non-bank lender with its two-year rate at 6.45% and TSB undercut Kiwibank today by 1 basis point offering the lowest bank two-year rate of 6.58%.

Despite this, BNZ economist Tony Alexander says if the intention of borrowers all along has been to sit floating simply waiting for the low point in fixed rates, then he would be inclined to fix for two-years now as his analysis of the margins suggests we are close to a round of rate rises.

The Banking Ombudsman reported this week that the general downturn in the economy, the ING frozen funds debacle and an 18% rise in mortgage finance complaints contributed to a year "unprecedented in the history" of the scheme.

It was also interesting to see the Australian Greens Party propose this week that laws should be made restricting the ability of banks to raise their rates in excess of Reserve Bank of Australia (RBA) rate rises.

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