In typical tabloid fashion, the media desperately try to make news out of anything that drives fear or greed, but mostly fear. Every eight weeks or so we have the anticipated build up to an OCR announcement.
And then dun-nuh … the OCR plummets 25 basis points or the RBNZ hikes it by 25 basis points, or as has been the case for the past two years, it does nothing. The rate is still 1.75%.
The point Grant Spencer made today (again I might add) is that they will be “accommodative” for a considerable period. In plain English, “rates will stay low.” That won’t stop the eight week cycle of rate speculation.
Interestingly on the other side of the world, the US increased its rates overnight and they now sit in the 1.50%-1.75% range. They’re anticipating another two rate increases this year which will squarely put US rates over our rates. That’s a rarity!
I’m still not convinced about global growth especially as the monetary drip is figuratively pulled out. I still think we are yet to fully appreciate the impact of both huge debt levels and technology led deflation.
Higher interest rates in the US will push up bank’s offshore borrowing costs and will increase longer term fixed rates – but nobody is fixing long-term in New Zealand anyway.
With credit growth and the housing market somewhat tamed, competition between banks will keep housing rates in check.
We’ve seen banks offering cash incentives again as they cut each other’s lunch. It seems there’s still a decent financial incentive to refinance if you can put up with the hassle of shifting.
After briefly increasing last year, mortgage rates have fallen back to their historic lows with rates in the low 4’s. For my money I think the three year fixed rate is looking attractive.
Our next OCR update is 10th May.
I can’t wait!
Top Reads:
- NZ Mortgage Rates and Housing Insights 2018
- Getting Started - First Home Buyers
- Mortgage Interest Rates