Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on the banks cutting down mortgage rates after OCR decision

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Jenee Tibshraeny: NZ Herald Wellington business editor on the banks cutting down mortgage rates after OCR decision · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
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  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:17
  Speaker 2: Bryan Bridge, you're a news Talk ZB and we will
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  Speaker 2: be speaking to Milford actually in just a few moments
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  Speaker 2: to get a market update right now. Though the banks
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  Speaker 2: have followed Adrian Or and they are cutting mortgage interest
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  Speaker 2: rates after the OCR decision this afternoon, AMZ it's two
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  Speaker 2: year rate is down below the five percent mark to
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  Speaker 2: four night, I mean barely four nine to nine, but
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  Speaker 2: it is of course bad news for savers. Term deposit
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  Speaker 2: rates have been cut to Jane Tips Training is the
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  Speaker 2: heralds Wellington business editor. She's with us tonight. Hi Jane,
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  Speaker 2: Hi Ryan. Now, I saw your question and I thought,
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  Speaker 2: great question to the Reserve Bank today at the press
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  Speaker 2: about the longer term rates your two to five years.
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  Speaker 2: What can we expect to see there?
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  Speaker 3: That's right. Assistant Governor Karen Silk basically tempered people's expectations
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  Speaker 3: around those longer term rates coming down. She made the
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  Speaker 3: point that yes, the OCI has a more direct impact
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  Speaker 3: on floating rates and on shorter term rates, but when
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  Speaker 3: it comes to those two, three, four five year mortgage rates,
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  Speaker 3: those are affected by a range of international factors that
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  Speaker 3: are beyond the reserve banks control. So the thing is
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  Speaker 3: is that at the moment, some of those factors are
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  Speaker 3: putting quite a bit of upward pressure on interest rates.
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  Speaker 3: So if you are floating or fixing for a short term,
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  Speaker 3: those rates will keep coming down a bit. But if
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  Speaker 3: you're looking to fix longer term, we might not see
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  Speaker 3: mortgage rates come down too much. Now, some of those
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  Speaker 3: factors that are pushing up those rates are the fact
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  Speaker 3: that investors around the world are worried about Donald Trump's
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  Speaker 3: policies being inflationary, so federal reserve interest rate that the
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  Speaker 3: Federal Reserve not cutting rates as quickly, also worried about
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  Speaker 3: geopolitical risks, and worried about the US, the finances in
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  Speaker 3: the US and the government's fiscal deficit. So those is
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  Speaker 3: are making it more expensive for banks to borrow, and
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  Speaker 3: that does affect people looking to fix their mortgages for
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  Speaker 3: longer terms.
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  Speaker 2: We're getting punched in the head twice, isn't it. You know, Well,
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  Speaker 2: finally we get some relief, but oh no, actually we've
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  Speaker 2: got trumps. So those longer term rates aren't going to
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  Speaker 2: be as attractive as we would have hoped.
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  Speaker 3: I know, it's it's really it's really one thing after
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  Speaker 3: the next, and yeah, and you know, the Reserve Bank
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  Speaker 3: did share a bit of data on that. They said
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  Speaker 3: that currently the average interest rate that banks receive on
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  Speaker 3: all their mortgages is about six point two percent. By December,
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  Speaker 3: they reckon it'll only get to five point seven percent.
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  Speaker 3: So while, you know, while we'll start to feel those
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  Speaker 3: lower interest rates quite soon, the overall impact is not
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  Speaker 3: going to be big. Like, if the average interest rate
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  Speaker 3: that banks are receiving is only five point seven percent
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  Speaker 3: by December, you know that shows that the rates will
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  Speaker 3: you know, stay stay a wee bit elevated. Five point
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  Speaker 3: seven percent is the least that it was at in
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  Speaker 3: late twenty twenty three.
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  Speaker 2: Wow, that is a really interesting stat Were you surprised
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  Speaker 2: the rbn Z still very firm on seventy five basis
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  Speaker 2: point cuts this year?
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  Speaker 3: Yeah, it was a little bit more dubbish than it
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  Speaker 3: was in November. I think that the Bank is worried
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  Speaker 3: about the effect that tariffs and some of this steur
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  Speaker 3: of political instability will have on GDP growth. It didn't
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  Speaker 3: interestingly take a view on the impact tariffs would have
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  Speaker 3: on inflation. That was something I was looking out for,
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  Speaker 3: but it said that we don't really know and there
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  Speaker 3: are quite a few moving parts there. Something else that
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  Speaker 3: people will be interested in. Doesn't think house price growth
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  Speaker 3: will recover too much. So it actually thinks house prices
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  Speaker 3: annually will will keep falling at the start of this
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  Speaker 3: year and then sort of return to single digit growth.
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  Speaker 3: So it doesn't believe that lower interest rates will see
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  Speaker 3: house prices take off anywhere close to the way they
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  Speaker 3: they took off during the pandemic.
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  Speaker 2: Interesting stuff, Jane, I thank you. He as always to know.
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  Speaker 2: Shraining with us Neoze on the Herald Welming and Business
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  Speaker 2: editor who has all the good numbers.
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