Well it is interesting to note that now after almost 5 weeks ago the OCR dropping to a record low in New Zealand of 3.5% the banks are now only just starting to pass the interest rates to the consumer. I am aware that the banks are facing increasing pressures as the sost of buying the money from over seas increases and our New Zealand Dollar drops further and further against the greenback (USD) which as of this morning was hoverng at a 6 year low of .49c
One notable company I have noticed that are being very competitive is the BNZ offering a 6 month fixed interest rate of 4.99% and Kiwibank are doing some good deals. The main point is to shop areound to find the best deal. What you will find is in this every changing market the best port of call is to talk to a mortgage broker before you commit to anything. The problem being that as the economy tightens into winter and money becomes hard to come by everyone will want the business for themselves. It is important not to get into this channel as there is so much happening every day that you need to be alert and aware.
Thats why I say get a mortgage broker you trust to help you. They are in the market and understand what is happening and in the economic times of today. A good friend of mine who is a top mortgage broker in my opinion “Kerry Kelly” is very onto it when it comes to todays market and knows how to best get finance for you. If you want to talk to her click her name which will go to her contact details and she will be able to help you no matter where you are in the country. Its worth a shot.
Below is something I read on the Herald website this morning about this very topic of banks passing on the lower interest rates to the consumer and it raises some interesting points that I think is important for everyone to be aware of when trying to get finance to buy a property in todays market.
Governor keeps heat on banks over credit
4:00AM Thursday Mar 05, 2009
By Brian Fallow
We have been putting quite a bit of pressure on the banks to ensure they are not treating New Zealand borrowers in an unnecessarily different way.
Alan Bollard, Reserve Bank GovernorReserve Bank Governor Alan Bollard kept the heat on the banks yesterday to continue lending to businesses on reasonable terms.
When Bollard appeared before Parliament’s finance and expenditure select committee yesterday, Labour’s finance spokesman, David Cunliffe, said his comment to last Friday’s job summit that the banks “should not underestimate the degree of corporate anger out there” chimed with what MPs had been hearing from major companies.
They were hearing of lending decisions now being made overseas and not by local relationship managers, Cunliffe said.
“That is a widespread concern in the corporate community,” Bollard said. “We had more discussions [with the banks] during and after the summit. My comments seem to have taken some of them by surprise.”
The banks were saying the market had got a lot more difficult, that it was harder to raise funds and riskier, and that that risk had to be passed on to corporate borrowers.
“We think that is true up to a point but it is very important they don’t go beyond that point and are there supporting investment into our recovery,” Bollard said.
“We would not want to see a home country bias [among the Australian parent banks] as is happening in
some places around the world.”
The banks said on Friday that they had increased their lending to the business sector by $3.6 billion in the December quarter and had received $4 billion in additional funding from their Australian parents.
Bollard acknowledged business sector lending had increased but said some of that was the drawing down of backup credit lines already in place plus a degree of “back-filling” of the hole left by collapsed finance companies.
Cunliffe asked if he was confident the Australasian banks were treating New Zealand corporates identically with Australian ones.
“I can’t say that,” Bollard replied, although he noted that some Australian companies were also complaining about tightening conditions and higher interest rates.
“We have been putting quite a bit of pressure on the banks to ensure they are not treating New Zealand borrowers in an unnecessarily different way – bearing in mind there are some arguments about extra risk here – or running down their balance sheets.”
Asked if he was happy about the extent to which banks were passing on official cash rate cuts to borrowers, Bollard said that at the short end of the interest rate curve there did not seem to be a big increase in banks’ margins. At the long end rates were driven more by what was happening in overseas markets.
He was more concerned about the terms and conditions of loans being tightened to unrealistic levels.