Rates Cut Ahead of OCR
November 24, 2008 New Zealand Finance
New Zealand banks are so sure of a December 4th OCR cut that they are preemptively slashing their own mortgage rates.
In expectation of an Official Cash Rate (OCR) cut on the 4th of December, interest rates are already being adjusted to by banks, analysts predict that this will be especially prominent on the 6 month rates. Leading the pack in rate cuts amongst New Zealand banks is BNZ, who on the 24th of November reduced their 6 month mortgage rate to 6.99 %. Kiwibank is offering the next lowest rate at a one year 7.29%.
Bank figures are confident in a fall in the OCR with key figures from the New Zealand banking industry making statements to that effect. Kiwibank chief executive Sam Knowles was quoted as saying that there will be a substantial cut to the OCR, and that Kiwibank would not just sit and wait for that to happen.
It is predicted that the OCR cut will between 50 and 100 points, although Goldman Sachs and Deutsche Bank are both making predictions of a 150 point cut, which would bring the OCR to a level of 5%. With an Official Cash Rate at this level and predictions for further cuts next year, it is conceivable for banks to drop their own rates to between 6 and 7%.