ANZ cuts home loan rates, lowest rate in three years
ANZ has dropped all of its fixed home loan rates after the Reserve Bank (RBNZ) cut the Official Cash Rate (OCR) last week.
The bank's 18-month fixed rate special was cut by 10 basis points (bps) to 4.89%, its lowest since April 2022.
The largest cuts
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
18 minutes ago
- RNZ News
How does the Reserve Bank actually set the OCR?
The official cash rate is now set by a monetary policy committee. Photo: RNZ The Reserve Bank will update the official cash rate (OCR) on Wednesday. But have you ever wondered how it goes about making the decision? John McDermott is now executive director of Motu Economic and Public Policy Service but was previously assistant governor and head of economics at the Reserve Bank. He spoke to RNZ this week about how the process works. The OCR is now set by a monetary policy committee, made up of three members of the Reserve Bank's staff - current governor Christian Hawkesby, assistant governor Karen Silk and chief economist Paul Conway. They are joined by external members professor Bob Buckle, economist Carl Hansen and professor Prasanna Gai. McDermott said the way the OCR was set had changed a little with the introduction of the formal committee. It was introduced in 2018, the year before McDermott left the bank. Before that, the Reserve Bank governor was the sole decision maker. Now, the committee aims for a consensus decision but sometimes goes to a vote. But McDermott said the overall approach would be broadly the same. He said there would be three key stages: Looking at what was happening overseas, assessing the situation in New Zealand and thinking about how the decision could be communicated with the right impact. He said the process would usually take about a week. "Staff will have been working on it for a lot longer than that. They'll put together a whole bunch of information on it for the committee to digest." There would normally be two days of "information pooling" meetings, and two days of deliberation meetings, with decision meetings after the deliberation meeting, according to the committee handbook. McDermott said attention would turn first to what was happening in the rest of the world. "What are the key conditions with our trading partners? How's that affecting New Zealand? Probably a lot of detail on the US, a lot of detail on China … probably an equal amount of detail on Australia." He said the committee would then look at financial markets. "Bond markets, equity markets, how does that flow over to New Zealand's access to capital? "It's important to get that setting, once that's established it'll be looking at New Zealand in detail." He said the second day of deliberations would look at recent data. "The minutiae of the data. What's going on with concrete sales or electronic car transactions … hopefully there will be some discussion of what's going on with businesses." He said that would usually involve looking at the results of interviews with various businesses about what they were experiencing. "When you look at the political elements, does that match with what businesses are telling you?" He said the committee would also need to look at banks' willingness to lend and the ability of firms to access capital. "Once you've gone though that it's all about what's happened and what's the environment when we're in. What does that mean for the future? How do you project forward given this is what's happening? What do we expect for inflation output and interest rates …. That will be the core element of the forecasts." He said different members of the committee would bring different experience and judgment, and opinions on what elements should be given more weight. Reserve Bank governor Christian Hawkesby. Photo: "After that process the committee is probably asking the staff, whom they've been leaning on heavily during the week, to not be there. The committee itself will ask what do we think about that, what are the risks? This is what the forecast looks like, this is the decision we think kind of makes sense." He said the committee would consider what the markets would do in response to a decision, and whether they would be shocked by anything that was decided. "What will that do to the prices that matter? And in interest rates, are we going to get the kind of reaction we want? "You should see the results of that in the press conference - this is what we did, this is why we did it ... trying to shape expectations and manage how that is delivered to the country." He said markets had sometimes "got it wrong" and priced in things that the Reserve Bank did not expect to happen. In that case, it would need to clarify the way it saw things. "But by the same token, if you think the financial markets have got it right and you want to validate those expectations you have to be careful not to say something stupid where the markets misunderstand you … you don't want to shock the markets by accident." The handbook said the decision about the appropriate monetary policy settings would be made the morning of the release so that there was less risk of sensitive information being leaked. McDermott said the committee would have to decide which data it needed to pay attention to and what it could set aside as not relevant. If data was volatile, it could sometimes set it aside and decide to come back to it for the next update. Something like a movement in the oil price would have an impact in the short term but then prove immaterial in the medium term. The bank would need to communicate that price increases as a result of something like an oil spike were not going to persist, he said. "With the increase in goods and services tax, prices will go up but they'll go up one time - that's not inflation - so we're going to look through that. But every time the bank or the monetary committee looks through something, it is really important that it explains that it is looking through something." McDermott said the geopolitical environment made rate setting hard at the moment. "There's tariffs that are playing out. What are they doing? Who's paying them? How are they affecting supply chains? Are they going to be the same next week as this week? There's a lot of noise and so you've got to be very disciplined in how you work through that." He said it was also important to be upfront when a judgment was wrong. "It's really important that central banks, when they've made a mistake, just front up and say 'look we made this judgment. We were clear on the judgment we made and it hasn't panned out that way so we're changing how we view things'. I think there's been a reluctance to do that in recent times … and I think that's a shame because it really is important." The Reserve Bank said, when the economic outlook could be at a turning point, the committee might use a "hawks and doves" exercise. "One MPC adviser would play the role of the 'Hawk', presenting all analysis that would support contractionary monetary policy, and then another would play the role of the 'Dove', presenting all analysis that would support expansionary monetary policy. This exercise aims to challenge the status quo and encourage wider deliberations." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Newsroom
a day ago
- Newsroom
Another rate cut expected this week, but then what?
This week's latest Monetary Policy Statement from the Reserve Bank is pretty much a foregone conclusion: another 25 point cut in the OCR is on the way. Certainly all the recent data points in that direction and though the domestic economy continues to falter we're probably near 'peak pessimism', according to ANZ economists, though the RBNZ still has plenty more work to do.
Scoop
2 days ago
- Scoop
There's No Doubt The RBNZ Should Cut. And They Will. But There Is Doubt That They Will Do Enough.
Press Release – Kiwi Economics The economic data and developments since the last MPS have strengthened the case for a more go for growth focussed RBNZ. The RBNZ will have removed the restrictiveness of monetary policy but that is not enough. The RBNZ's policy decision is approaching. Will they cut? Yes. Will they signal another cut to come? Yes. Will it be enough? Not quite. There's no doubt that the Kiwi economy needs support. There's no doubt the RBNZ needs to stimulate. But there is doubt that they will deliver? They should. The weakness in the economy demands stimulus. With all the risks offshore, and the pain still felt onshore, there's a good argument to be made for taking policy into stimulatory territory asap. An argument that is growing in support. Our COTW looks at the latest REINZ housing data, which much like the current season, feels stuck in an endless winter. House prices have dipped for a second month in a row. And activity remains subdued. Here's our take on current events From the RBNZ's perspective, this week's decision, with updated forecasts, sets the scene for the next 3 months (see our full preview here). And it will help set the trading ranges for financial markets. The economic data and developments since the last MPS have strengthened the case for a more 'go for growth' focussed RBNZ. The RBNZ will have removed the restrictiveness of monetary policy… but that is not enough. Wednesday's decision by the RBNZ should set a policy path that is right for the recovery. We need a stimulatory monetary policy setting. So, what do we mean? Estimates of a 'neutral' setting – when policy is not hurting but certainly not helping – range from 2.5-3.5%, with 3% being roughly right. So, a cash rate of 3% isn't stimulatory, and it isn't encouraging excessive behaviour or inflation. But we need a stimulatory rate if we're going to encourage businesses to take on risk – by either investing or hiring. And we need a stimulatory rate if we're going to see embattled households boost discretionary spend. 2.5% is closer to what we need. And the risks are towards a 2% cash rate, not 3%, in our opinion. That said, the RBNZ has proven to be reluctant, all the way down. A more decisive RBNZ would be viewed positively across the road (Terrace), given the difficulty the Government has in balancing the books. And a more decisive RBNZ would be viewed positively by Kiwi business owners, property investors, and most households with debt. Unfortunately, it is never straight forward. And there are three likely scenarios that could play out on Wednesday: The first scenario is the one the RBNZ may find the easiest to deliver. The RBNZ delivers a 25bp cut and leaves the OCR track at 2.85% or thereabouts. This would not go down well. Wholesale market traders would push interest rates higher, again frustrated by the RBNZ's reluctance in getting the job done. The OCR endpoint priced into the OIS strip would lift from ~2.71% towards 2.85-2.9%. Unhelpful. The pivotal 2-year swap (interest) rate would rise from around 3.06% now to 3.15% (about 15bps). Mortgage rates would barely move… although they had been lowered a little in response to the recent fall in wholesale rates. But the risk then turns towards a slight lift in mortgage rates. Very unhelpful. The Kiwi currency would pop higher, towards 60.50c and possibly 61c in time. Not what exporters want to see with an intrusive 15% tariff from the US. The second scenario is what we think they will do, with least regret and least resistance. A 25bp cut accompanied by a lower OCR track to 2.7% (or close to). Currently, most economists sit between a low of 2.5% (Kiwibank) and a high of 3%. This scenario will push most economist forecasts to a lower 2.25-2.75% range. Such a move would support current market pricing of a 2.71% terminal rate. The 2-year swap rate should ease back to 3%, supporting current mortgage rates. The short dated mortgage rates may ease a little more, whereas the 3-5 year rates may not move much at all. The Kiwi currency would probably stay around 60c. It's a move that supports markets, but does not stimulate. The third scenario is 'go for growth' and generate greenshoots. A Doveish Hawkesby should put a 2.5% cash rate firmly on the table. The shock without Orr would see wholesale rates continue their downward spiral. The 2-year swap rate would ease towards 2.8%. All mortgage rates would likely be lowered, as needed. And the Kiwi currency would fall towards 58c, giving a bit of relief to exporters, and helping to offset the US tariffs.
