If actions speak louder than words, the complete inaction by all mortgage lenders over the last week is an eloquent answer to the Reserve Bank's latest attempt to jawbone down floating mortgage rates.
The central bank says the spreads between marginal funding costs and floating mortgage rates have widened in recent months to "historically high levels."
The government-owned Kiwibank has the lowest floating rate of all the registered banks at 5.99%, beaten only by co-operatively-owned PSIS at 5.95%, but that's still way above the Reserve Bank's official cash rate (OCR) at 2.5%.
Moreover, Kiwibank has held its floating rate steady since mid-February, despite the central bank cutting the OCR twice by a whole percentage point since then.
The other banks' floating rates range from HSBC and SBS Bank at 6.3% to Westpac's 6.49% (Bank of New Zealand has a confusing array of floating rates ranging from 5.99% through to 6.7% but its standard rate is 6.45%.)
But while the politicians and central bank huff and puff to no avail, would-be borrowers who don't want to fix for extended periods have a viable alternative in banks' six-months fixed rates which are considerably lower than current floating rates.
Westpac is the lowest in the market with a 5.39% six-months fixed rate.
Reserve Bank figures do indicate there's been a seismic shift in the market away from fixing for two years or longer. In May 2007, floating rate lending accounted for only 13.4% of total mortgage lending by registered banks while loans fixed for less than a year accounted for another 24.2%, the two accounting for 37.6%.
In May this year, floating rate lending was 23.5% of the total and loans fixed for less than a year accounted for another 33.9%, or 57.4%.
