The move reflects wholesale rate movements, spokesman says
ANZ has slashed the interest rate it charges on its two- and three-year home loans, in a move that reflects wholesale rate movements and ensures the bank remains competitive.
The interest rate on ANZ’s standard two-year home loan fell 10 basis points to 7.09%, with the special rate on that term dropping by the same margin to 6.49%.
The bank’s three -year rate, meanwhile, decreased by 60 basis points, taking the special to 5.99% and the standard rate to 6.59%, Stuff reported.
ANZ was not the only bank to cut rates. Several banks have also trimmed the interest rates they were charging on longer-term lending in recent weeks.
That despite the Reserve Bank of New Zealand lifting the OCR by 50 basis points at the most recent review, to 5.25%, with a further rate hike tipped at the next meeting, to 5.5%.
In its most recent update, RBNZ expressed concern at weakness in the wholesale markets, which it said could result in lower retail rates, lowering the impact of OCR hikes.
Gareth Kiernan, Infometrics chief forecaster, said the central bank would probably have been heartened by the recent inflation data, showing a decline in the pace of price rises.
“But the fact that wholesale markets have been pricing in possible rate cuts, and haven’t fully been pricing in previous rate hikes, lines up with the rationale behind the bank’s most recent 50-point increase, which was to push against the downward pressure on retail rates that had been developing,” Kiernan told Stuff.
“A three-year rate of 6% is a bit of a double-edged sword. It means the immediate direct effect on mortgage holders rolling off lower fixed rates is not large as if they had to refix at 6.5% or 7%, so it potentially moderates the extent of the near-term slowdown in household demand that might otherwise have occurred.
“However, it also means that the effects of current monetary settings could be felt for longer as homeowners are committed to higher rates for a longer period than might otherwise be the case.
“All in all, I’d expect any continued near-term cuts in mortgage rates could increase the likelihood of the bank pushing through two more 25 basis point increases to the official cash rate, rather than the single increase that financial markets and most forecasters are anticipating.”
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