OCR likely close to the peak, economists say
Two major banks have raised the interest rate on some of their home loan terms.
Westpac raised its two- and three-year terms by 20 basis points, taking the special two-year rate to 6.79% and the special three-year to 6.49%.
The bank’s 18-month fixes and four-year rates, meanwhile, lifted by 14bps and 10bps, respectively.
For Westpac borrowers who do not qualify for a special, the standard two-year rate now sits at 7.39%, Stuff reported.
ANZ raised its six-month and one-year rates by 20bps. The bank’s one-year special rate now sits at 7.19%. Its two-year special rate increased by 30bps to 6.79%.
But ANZ’s standard four- and five-year rates will be slashed by 30bps and 20bps, respectively.
Gareth Kiernan (pictured above left), Infometrics chief forecaster, said he expected interest rates to be near their peak.
“At this stage, I wouldn’t expect to see any further interest rate increases after next month,” Kiernan said. “However, I note that 10-year government bond rates are still coming under upward pressure and, apart from one day in October last year, haven’t been higher since January 2014.
“So, there are still pressures coming through from wholesale markets, and I’m still concerned that banks’ margins look smaller than usual as well, so any pressure to restore those margins could translate through into higher rates as well.”
The key message here, he said, was that even if the OCR is close to the peak, “mortgage rates are not going to come down particularly quickly on the other side.”
Jarrod Kerr (pictured above right), Kiwibank chief economist, noted a persistence in rate expectations, Stuff reported.
“Not expecting higher rates, but current rates holding for longer. I still disagree,” Kerr said. “I think we will ultimately see lower rates come through as the full force of Reserve Bank tightening hits the mortgage belt over the next six months.”
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