The window of low bank mortgage rates is diminishing for the borrowers and ANZ, ASB and Westpac are lifting their retail mortgage rates on Monday.
Across the 5 main banks, standard 1-year fixed bank mortgage rates start from 3.6%, 2-year from 4.35%, and three-year from 4.69%. 5-year rates start from 5.19%, the cheapest floating rate from 4%.
Ahead of Wednesday’s Official Cash Rate (OCR) announcement, ASB chief economist Nick Tuffley told Newshub financial markets have already priced in an OCR of around 3% by mid-2023.
After consumer prices jumped 4.9% over the year to September, a survey of business inflation expectations released by the Reserve Bank on the 18th of November shows expectations have risen very sharply.
Annual consumer price inflation is expected to reach 3.7% in 1 year and 2.96% in 2 years, above the Reserve Bank 2% target midpoint, survey results showed.
Bank Mortgage Rates Were On The Rise And Linked To Wholesale Interest Rates
Following these results, the wholesale rates went up which caused a sharp lift in retail mortgage rates and savings rates.
Nick Tuffley stated that they had seen the wholesale interest rates rise quite sharply and that was feeding through into all the term lending rates.
While ASB forecasts show a 25 basis point rise to the OCR to 0.75% on Wednesday, markets have effectively priced in a 50-50 chance of a 50 basis point increase, Tuffley said.
One of the important indicators on Wednesday will be whether the Reserve Bank lifts its OCR forecast. Based purely on targets the Reserve Bank is needing to hit over the medium term, everything is pointing to a need to keep lifting the OCR. But the COVID-19 Delta outbreak still creates uncertainty and risk, particularly as restrictions ease over summer.
The Official Cash Rate and Bank Mortgage Rates will be reviewed on Wednesday, as part of a Reserve Bank Monetary Policy Statement.