Lower long-term rates predicted
Westpac today became the market leader for five year fixed rate loans, cutting interest rates to 4.99 percent. The move saw the lender leap ahead of HSBC’s special offer for Premier customers.
It follows ASB's move to cut its four year fixed term interest last week to 5.35 percent.
Lenders have made their first moves after the Reserve Bank issued a cautious note on the economy last week, forecasting the OCR would not rise until 2020 at the earliest. The bank has repeatedly refused to rule out a cut, leading economists to change their forecasts and anticipate lower interest rates for longer."
Kiwibank economists revised their interest rate forecasts to a "lower for longer curve" following the Reserve Bank announcement. “We have discovered inflation to be a difficult beast to resuscitate in the post-crisis, and demographically challenged world. The realisation that the RBNZ Governor is seemingly more willing to let inflation run, led us last week to lower our OCR trajectory. Our 1-to-3 year interest rates forecasts, pegged to expectations for the OCR, were also mechanically lowered. Yet the Kiwibank economists say they expect a steeper yield curve once rates do eventually rise.
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