One of the trends in the home loan market is that in the week before a Reserve Bank Official Cash Rate (OCR) announcement few changes are made. That was true for last week, however this week is shaping up to be different.
BNZ’s Unbeatable campaign with its low two-year fixed rate is due to finish on Friday – in fact all draw-downs have to be made by then.
On the other side ASB Bank and its cousin Sovereign have chopped 30 basis points off their six month, three, four and five year rates, lowering them from 8.10% to 7.80%.
Both lenders now have all their fixed rates sitting at 7.80%. Borrowers can probably expect other lenders to follow suit.
Longer-term home loan rates are set off what is happening in the United States money market. Over the past month US bond yields have fallen away from 4.55% three weeks ago to 4.19% at the end of last week.
This decrease has been assisted by a fall in the share market after a number of leading companies, including General Motors, posted profit warnings. Another driver has been some weaker than expected economic data which means the US equivalent of New Zealand’s Reserve Bank, the Federal Reserve, is likely to slow down its monetary policy tightening cycle.
Back in New Zealand all eyes are on what the Reserve Bank will do on Thursday.
The majority view is that it will leave the OCR at 6.75%. A Reuters poll of 14 economists found on average they think there’s a 75% chance Bollard will do nothing and only a 25% chance he will raise the OCR again. None think RBNZ governor Alan Bollard is likely to lower rates.
Standard three-year home loan rates currently range from Bank Direct at 7.60% up to New Zealand Mortgage Funds at 8.38%. Most of the banks are offering a rate of 7.80%.
Six month rates range from 7.60% (SMC, SBS, General Finance, Bank Direct and ABS Canterbury) through to 8.10% (AXA, National Bank and Westpac).
To compare home loan rates go tohttp://www.goodreturns.co.nz/section/200.html
