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Mark Wilkshire: Co-operative Bank CEO on the impact of the OCR hike on home loan rates · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: As expected, the RBNZ hikes the OCR 25 basis points
• 0:04
  Speaker 1: to 2.75%. Now, inflation likely peaked. Recovery is underway. That's
• 0:09
  Speaker 1: all good stuff. Strong exports. Thank you very much.
• 0:12
  Speaker 2: What we have seen is that wholesale interest rates have
• 0:15
  Speaker 2: increased in anticipation of the rate hike today. So in
• 0:20
  Speaker 2: terms of the most common tenures, like one to three years,
• 0:25
  Speaker 2: we don't expect much of an effect because there's already
• 0:28
  Speaker 2: been hikes from the banks.
• 0:31
  Speaker 1: Joining me this morning, Mark Wilkshire, Co-op Bank CEO. Mark,
• 0:34
  Speaker 1: nice to have you on the program as always. Good morning.
• 0:37
  Speaker 3: Good morning, Ryan.
• 0:38
  Speaker 1: What are you guys doing with your rates after this?
• 0:40
  Speaker 3: Anything? Well, I think actually this is reasonably good news
• 0:43
  Speaker 3: because the Reserve Bank change was largely expected. So those
• 0:48
  Speaker 3: rates have been built in. And so we're not expecting
• 0:50
  Speaker 3: to see those rates come up as a result of this.
• 0:53
  Speaker 3: In fact, the comments were what we'd call dovish. So
• 0:57
  Speaker 3: they were basically more supportive of the current track and
• 1:01
  Speaker 3: they were not indicating a lot of future rises. So
• 1:05
  Speaker 3: relatively good news for borrowers out there.
• 1:07
  Speaker 1: Some banks have already moved to, I notice all the
• 1:10
  Speaker 1: floatings have gone up by the 25 basis points, or
• 1:13
  Speaker 1: a lot of them have anyway.
• 1:15
  Speaker 3: Yeah, they'll pass that through to those variable home loans,
• 1:18
  Speaker 3: so that'll all happen quite quickly. But largely this track
• 1:22
  Speaker 3: that they put out, so this was the first monetary
• 1:24
  Speaker 3: policy statement we've seen since May. And so the forecast
• 1:28
  Speaker 3: was what was really interesting about this update yesterday. And
• 1:32
  Speaker 3: there was certainly perhaps one more to come by Christmas,
• 1:36
  Speaker 3: and then potentially getting back that neutral rate around $ 3. 25.
• 1:39
  Speaker 3: So that's actually better than some of the forecasts that
• 1:43
  Speaker 3: were built in previously. So that's why those fixed rates
• 1:46
  Speaker 3: haven't pushed up anymore.
• 1:47
  Speaker 1: Do you reckon they hold it just before the election
• 1:50
  Speaker 1: for whatever reason and then do the other one in December?
• 1:54
  Speaker 3: Yeah, we've seen two rises now, July and now September.
• 1:56
  Speaker 3: So I think it's quite likely you might skip October
• 2:00
  Speaker 3: and then my money would be on one more in December.
• 2:05
  Speaker 1: Does Bremen have a point, sorry Mark, does Bremen have
• 2:07
  Speaker 1: a point when she says that the banks are too
• 2:09
  Speaker 1: slow to pass on the benefits and too quick to
• 2:13
  Speaker 1: put the rates up for the loans?
• 2:16
  Speaker 3: No, I don't think so. I think if you look
• 2:18
  Speaker 3: over the longer horizon there, they've been pretty even-handed with
• 2:22
  Speaker 3: passing those through. And in fact, if anything, those fixed
• 2:27
  Speaker 3: rates are pretty competitive out there when you've got one-year
• 2:31
  Speaker 3: rates at $ 499. So... I think they've been pretty responsible, actually.
• 2:36
  Speaker 1: Generally, SITREP, where we're at as an economy, things are
• 2:41
  Speaker 1: on the up.
• 2:42
  Speaker 3: Yeah, there was some good commentary here about overall, still
• 2:46
  Speaker 3: some uncertainties out there, a little bit mixed still, but
• 2:49
  Speaker 3: actually overall, economic growth is expected and we are seeing
• 2:53
  Speaker 3: those signs of economic growth coming through. So that is
• 2:56
  Speaker 3: a positive.
• 2:57
  Speaker 1: Good stuff. Mark, nice to have you on the show
• 2:58
  Speaker 1: as always. Mark Wilkshire, Co-operative Bank CEO.
• 3:02
  Speaker 3: For more from Early Edition with Ryan Bridge, listen live
• 3:05
  Speaker 3: to News Talk ZB from 5 a.m. weekdays or follow
• 3:08
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