Nonetheless, floating rates are bound to head for 9.5% this week as Westpac and HSBC led the way with 25 basis point increases in their rates effective today.
In the December monetary policy statement, Reserve Bank governor Alan Bollard toned down the vehemence of his recent warnings on the property market.
But housing still remains a key trigger for what is in store for mortgage rates next year.
The MPS said: “whether further tightening is needed will depend on the extent to which housing and demand pressures show signs of moderating over the months ahead”.
This can be read as slightly less hawkish than the “noticeable moderation” in domestic spending Bollard had in October as a pre-requisite for not tightening further.
But there’s also no easing on the horizon. “We do not see any prospect of a policy easing in the foreseeable future.”
The housing market remains at the forefront of the Reserve Bank’s decision-making process.
“Overall demand continues to outstrip available capacity. The main driver of the strong demand is household spending, linked to a still buoyant housing market,” the MPS said.
“Mortgage credit growth and house prices had help up longer than anticipated; we are forecasting these to slow markedly in 2006, but continued strength remains a risk,” it said.
Any more rate hikes will be data dependent, with the main risk being house prices, Westpac chief economist Brendan O’Donovan says.
Seasonality means February and March housing figures will be key.
Nonetheless, O’Donovan expects the central bank to be on hold for now, as do the majority of other bank analysts.
Ahead of the MPS, some lenders tinkered with fixed rates, but the pace of change was slower than in recent weeks.
One-year rates now vary from the 7.60% offered by Southern Cross to 9.10% from GEM Home Loans. There were three increases over the week.
Two-year fixed terms range from Housing Corp’s 8.00% to 8.95% from Headstart and six lenders raised this rate.
Three-year rates start at the 7.95% offered by Housing Corp and end with Headstart and Westpac’s capped rate of 8.85%. There were two increases.
Four-year fixed rates vary from the 7.95% offered by Loan Plan, Kiwibank, and Mortgage Finance to the 8.36% from NZ Mortgage Funds. Again, there were two rises.
In the five-year part of the market, rates vary from 7.7% offered by Housing Corporation, Kiwibank and Mortgage Finance to Gem Home Loans’ 8.6%. Four lenders raised this rate over the week.
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