Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on what today's OCR cut means for mortgages

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Jenee Tibshraeny: NZ Herald Wellington business editor on what today's OCR cut means for mortgages · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. There'd be
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  Speaker 2: You know Tibstradi, the Herald's Wellington business editor, is with us. Now,
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  Speaker 2: how do you know? Okay? So, how many banks have
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  Speaker 2: dropped the mortgage rates by half a percentage point?
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  Speaker 3: Then am out straight straight away, straight after the Reserve
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  Speaker 3: Bank announced the cuts. In fact, one bank I got
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  Speaker 3: an email from them before I got a message from
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  Speaker 3: the Reserve Bank saying that it was cutting the OCR
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  Speaker 3: by fifty basis points. So they've all moved, They've all
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  Speaker 3: moved quickly.
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  Speaker 2: That's good. Okay, what are we expecting from how the
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  Speaker 2: US election is going to affect what happens from here
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  Speaker 2: on in? Because it sounds like the Reserve Bank's a
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  Speaker 2: little worried about it.
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  Speaker 3: Yeah, yeah, Look, I think the Reserve Bank today just
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  Speaker 3: Adrianal tempered people's expectations a little bit, and in fact
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  Speaker 3: he said the thrill might not be as big as
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  Speaker 3: what it looks like. Those were Adrianal's words today. Now,
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  Speaker 3: the reason for this is that the OCR isn't the
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  Speaker 3: only thing that influences the mortgage rates. That you and
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  Speaker 3: I pay. Banks also get funding from offshore markets. They
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  Speaker 3: borrow money from overseas. And the issue here is that
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  Speaker 3: the interest rates that are being charged for these money
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  Speaker 3: markets around the world are elevated at the moment, and
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  Speaker 3: that is because of the outcome of the U s election.
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  Speaker 3: So because Donald Trump is promising tax cuts in the US,
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  Speaker 3: people think that the deficit in the US will be deeper.
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  Speaker 3: You know that the US will continue being in a
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  Speaker 3: lot of debt. And also Donald Trump with the tariffs
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  Speaker 3: and things that he's proposing, they could be inflationary. All
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  Speaker 3: of this creates more uncertainty and more risk, and investors
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  Speaker 3: price that risk into assets. And if there's more risk,
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  Speaker 3: there's you know that there's a risk premiere priced in
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  Speaker 3: that elevates interest rates. So if those interest rates in
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  Speaker 3: global money markets are higher, then that influences banks funding costs,
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  Speaker 3: and that influences interest rates that we pay. So you
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  Speaker 3: know that it's still a positive story. Mortgage rates are
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  Speaker 3: still coming down. We should just be a little bit
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  Speaker 3: cautious about the extent to which they will fall.
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  Speaker 2: Yeah, that's a very good point. You know, thanks for
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  Speaker 2: talking story. To appreciate it, you know, to trainee the
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  Speaker 2: Herald's Wellington Business Edit.
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