Latest / The SME Stream / Bruce Patton: mortgage advisor on why the banks haven't factored latest OCR cut into their fixed-term rates

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Bruce Patton: mortgage advisor on why the banks haven't factored latest OCR cut into their fixed-term rates · The SME Stream

• 0:00
  Speaker 1: If you have a mortgage and you've been waiting and
• 0:03
  Speaker 1: waiting for your bank to pass on last week's fifty
• 0:05
  Speaker 1: basis point cut to the OCR, you might be waiting
• 0:08
  Speaker 1: for a while. Banks have all cut their floating rates,
• 0:11
  Speaker 1: but the term rates haven't really moved much since last week.
• 0:15
  Speaker 1: Bruce Patten is a mortgage advisor with US This evening
• 0:17
  Speaker 1: killed up.
• 0:19
  Speaker 2: Hi there, how are you?
• 0:20
  Speaker 1: Yeah? Well, thanks, So the OCR has been cut by
• 0:22
  Speaker 1: fifty basis points. Why haven't all mortgage rates been cut
• 0:25
  Speaker 1: by the same amount.
• 0:27
  Speaker 2: Well, you'll have seen that all the floating rates will
• 0:30
  Speaker 2: have probably almost all come down by now, a lot
• 0:33
  Speaker 2: of the fixed rates. It's not the OCR doesn't directly
• 0:37
  Speaker 2: relate to just them that there's people money on tom deposit.
• 0:41
  Speaker 2: You've got their swap rates for the overseas wholesale market.
• 0:44
  Speaker 2: And the other big fact at this time was that
• 0:47
  Speaker 2: everybody had fully priced in that we were going to
• 0:50
  Speaker 2: get fifty basis points, whereas the last two cuts it
• 0:53
  Speaker 2: was what are we going to get? Are we going
• 0:55
  Speaker 2: to get one? How much is it going to be?
• 0:57
  Speaker 2: So the market didn't really know this time. They knew
• 0:59
  Speaker 2: we're getting fifty maybe seventy five, So We saw a
• 1:03
  Speaker 2: few banks move a few days before we saw the
• 1:05
  Speaker 2: BENZ come down from six point four nine to five
• 1:08
  Speaker 2: nine nine on the Monday before the OCR was even announced. Yeah,
• 1:11
  Speaker 2: so a lot of the rates had already moved.
• 1:13
  Speaker 1: Yeah, there was a bit of movement heading up to
• 1:15
  Speaker 1: the announcement itself. Does that mean that when it comes
• 1:18
  Speaker 1: to those fixed term rates we're unlikely to see more
• 1:21
  Speaker 1: movement until we get closer to February's next cut?
• 1:25
  Speaker 2: That's right. I think that's probably it for Christmas. You
• 1:28
  Speaker 2: might get lucky, some bank might decide they're going to
• 1:30
  Speaker 2: bring out a little special but I would say not,
• 1:33
  Speaker 2: because what you've got to remember is rates were over
• 1:35
  Speaker 2: seven only in August and we're now right down to
• 1:40
  Speaker 2: less than five and mid five in some cases. So
• 1:43
  Speaker 2: you know we've had what one point twenty five off
• 1:45
  Speaker 2: the OCR. Well, we've already had at least one point
• 1:48
  Speaker 2: twenty five off the fixed rates. So that says to me,
• 1:51
  Speaker 2: we've got all we're going to get.
• 1:52
  Speaker 1: What are people fixing for right now?
• 1:56
  Speaker 2: Mostly short term six or twelve months. If I was
• 2:00
  Speaker 2: to give anyone any advice, it would be just be
• 2:02
  Speaker 2: careful about fixing too long, because once everybody starts to
• 2:06
  Speaker 2: jump into those two three five year fixed rates, you
• 2:09
  Speaker 2: might see them start to go back up a bit
• 2:11
  Speaker 2: because at the moment no one's using them, so the
• 2:13
  Speaker 2: banks really aren't doing anything with it. So my advice is,
• 2:17
  Speaker 2: don't leave it too long. If you can afford. If
• 2:20
  Speaker 2: we see a rate at say five or four nine nine,
• 2:23
  Speaker 2: if we were lucky and you can afford that, take it,
• 2:26
  Speaker 2: then don't try to wait for another one point one
• 2:29
  Speaker 2: point two. Fix it when it's affordable for you. Yeah.
• 2:32
  Speaker 1: How competitive are the banks right now?
• 2:35
  Speaker 2: Well, like, well, they're a bit like petrol companies, right
• 2:39
  Speaker 2: They tend to feel allow one another quite quite closely.
• 2:43
  Speaker 2: And you've got to remember they're all sourcing their money
• 2:45
  Speaker 2: from the same place as well, so that it costs
• 2:49
  Speaker 2: them the same wherever. So when they're giving a special,
• 2:52
  Speaker 2: they're generally taking a bit of a hit, so they
• 2:56
  Speaker 2: don't tend to stay around for very long. So ain
• 2:59
  Speaker 2: z one year at five five nine, not long before
• 3:02
  Speaker 2: the official cash rate. But then they did away with
• 3:05
  Speaker 2: it because I think they saw that maybe the rate
• 3:09
  Speaker 2: wasn't going to be cut by point seventy five, so
• 3:11
  Speaker 2: they thought, well, we better get rid of it. Because
• 3:13
  Speaker 2: it's costing us money. So yeah, so sometimes they will
• 3:16
  Speaker 2: when they're trying to attract new business, and other times
• 3:19
  Speaker 2: they're out of the market, but generally they're all much
• 3:21
  Speaker 2: of a muchness to be honest.
• 3:23
  Speaker 1: Yeah, all right, thanks Bruce, appreciate it. That is Bruce Patten,
• 3:25
  Speaker 1: mortgage advisor,