In the hours following the earthquake a week ago, two-year swap rates fell 25 basis points and continued to fall during the week to around 45 basis points lower in response to market expectations that the Official Cash Rate (OCR) would be cut by the Reserve Bank.
It was only a matter of time before this drop was reflected in fixed mortgage rates with ANZ and National banks taking the lead and opening the door for competition.
ANZ and National have cut their one-year fixed mortgage rates by 50 basis points to 5.95% which is below their floating rate of 6.20%. It is also a big drop compared to the median for banks of 6.45%.
Their 18-month rate has fallen by 26 basis points to 6.29%, their two-year rate by 16 basis points to 6.49% which is 11 basis points lower than the median for the banks and their three-year rate has been cut by 11 basis points to 6.99%.
The markets and ANZ are both expecting the Reserve Bank to cut the Official Cash Rate by 25 basis points to 2.75% this Thursday in its Monetary Policy Statement.
"The sheer scale of the event [Christchurch earthquake] and pending impact on confidence warrants an immediate response," says ANZ.
