Wholesale rates have been tracking upwards over the last couple of weeks.
The one-year swap rate is up about 0.20% from where it was in the lead-up to our last Official Cash Rate (OCR) decision on 26 November, while longer term swap rates are up between 0.40% and 0.50%.
That’s really a reflection of the market’s expectation that we’re now at the bottom of this interest rate cycle, and that the 0.25% cut we got last month will be it for this round.
We’ve seen a mixed response across different lenders and fixed rate terms so far.
At the time of writing, we’ve had three major banks increase a number of their medium to longer-term rates (ranging from two to five years) already—and the rest are expected to follow suit at some stage.
Meanwhile, the six-month rate has come down slightly, and the one-year rate is holding steady.
What should borrowers be thinking about in this environment?
If your existing bank is one of those yet to push through increases—which have been pretty substantial—medium-term rates (two to three years) are offering good value for money.
Otherwise, those 12- to 18-month rates are an option worth considering, just so you can take advantage of the low rates that are still on offer.
In a changing rate environment, it’s always recommended to chat to mortgage broker for guidance on the strategy that might work best for you and your situation.
Finally, it’s worth noting that it’s back to regularly scheduled programming on the cashback front
The 1.50% cashback deal that’s been on offer over the last few weeks has now ended. Lenders are back to offering 0.90% cashbacks on residential lending and 1.00% on construction lending.
Check back in again next week for the latest news on New Zealand interest rates.
