New Zealand banks lower rates under pressure
(3 November 2011 – New Zealand) More banks are under increased pressure to lower interest rates after a few of New Zealand’s banks made the move in the past few weeks.
ASB Bank became the latest lender to drop costs across its fixed mortgage products, cutting rates by an average of 26 basis points across all fixed home loan products, just as Kiwibank and HSBC’s local unit had.
The Reserve Bank of New Zealand (RBNZ) kept the official cash rate at 2.5 percent and pushed out the timing of rate rises into the middle of next year.
As a result, swap rates, or the costs banks pay for funding, had fallen, with the yields on the two-year benchmark swap falling almost a fifth since 1 August to recently trade at 3.11 percent.
An economist at Deutsche Bank, Darren Gibbs, told Fairfax the current position of banks suggested that those cuts were unlikely to reverse suddenly.
'The general impression is that banks are well-funded to the end of the year, so they are not under immediate pressure to raise money and face funding costs that put pressure back onto mortgage rates.'
However, homeowners were unlikely to rush to switch, according to Gibbs, with floating rates still attractive relative to fixed.
That is backed by the latest figures from the Reserve Bank which showed 58 percent of homeowners were on floating mortgages in September, a level that has remained consistent this year.
The Reserve Bank of New Zealand (RBNZ) kept the official cash rate at 2.5 percent and pushed out the timing of rate rises into the middle of next year.
As a result, swap rates, or the costs banks pay for funding, had fallen, with the yields on the two-year benchmark swap falling almost a fifth since 1 August to recently trade at 3.11 percent.
An economist at Deutsche Bank, Darren Gibbs, told Fairfax the current position of banks suggested that those cuts were unlikely to reverse suddenly.
'The general impression is that banks are well-funded to the end of the year, so they are not under immediate pressure to raise money and face funding costs that put pressure back onto mortgage rates.'
However, homeowners were unlikely to rush to switch, according to Gibbs, with floating rates still attractive relative to fixed.
That is backed by the latest figures from the Reserve Bank which showed 58 percent of homeowners were on floating mortgages in September, a level that has remained consistent this year.
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