By: Mortgage specialist – Mike Bloy
After eight successive holds we have seen the Reserve Bank drop the official cash rate at three consecutive announcements leading into the silly season. From a strongly held 5.5% we now have a base rate of 4.25% (after decreases of 0.25% in August, 0.5% in October and a further 0.5% in November) which means in theory, retail rates should follow.
However, it seems in practice that the banks aren’t yet embracing the Christmas spirit and passing on the generous discounts to mortgage holders and prospective homeowners. While some relief has been provided on the back of one major bank leading the charge with a discount on the one year fixed rate after the October announcement, they were quick to remind borrowers that it was a ‘limited time offer’ as the ‘special’ bounced back in line with its competitors a few weeks later.
We can take some solace in the fact the six month rate has reached the 5’s (.99) and we have another OCR announcement in February. Here’s hoping the bank margins fatten up enough over the festive period to a point that there is no choice but to instil competition between lenders again and offer some relief to borrowers.
Meanwhile the property market seems to be heating up. Listings are on the rise, bank application queues are full to the brim and first home buyers are checking their KiwiSaver balances as property is expected to be the summer BBQ topic once again.