Easing OCR Expected To Stimulate Housing Market
May 17, 2001
Floating mortgage interest rates have eased over April and May, the downward movement gaining momentum with the Reserve Bank of New Zealand’s announcement yesterday of a further lowering of the official cash rate by 0.25 bps to 5.75 per cent. As a result, according to the Real Estate Institute of New Zealand, the increasingly homeowner-friendly interest rate environment will stimulate activity in the residential housing market.
National President of the Real Estate Institute, Mr Rex Hadley, said that in the month to May 10, twenty-one of the twenty-six institutions surveyed had reduced their floating rate, while fifteen had eased their shorter term fixed rates.
He said, “As of the Institutes last survey, floating interest rates were already easing steadily, and since Dr Brash’s announcement, the majority of lending institutions have lowered their floating rates even further.”
“As Dr Brash noted, consumer confidence has been falling, and the Institute applauds the latest easing of the OCR as we believe that the resulting lowered mortgage interest rates will encourage more New Zealanders to become homeowners.”
“While the degree of easing in rates over the last twenty four hours only translates to a monthly saving of $15 on a $100,000 loan, the resulting benefits for homeowners with lower incomes should not be underestimated.”
Mr Hadley also said that homeowners should not assume that the Reserve Bank will continue to ease the official cash rate.
“There are indications that the Reserve Bank is reluctant to continue easing the OCR and so potential homeowners who are waiting to pick the lowest point of the interest rate cycle before committing to a mortgage should carefully consider their options.”
As of May 10, one year fixed rates range between 6.40 to 7.10 per cent, two year rates ranged between 7.10 and 7.29 per cent, three year fixed rates range between 7.10 and 7.70, while four and five year rates range between 7.25 and 7.95 per cent.
Floating rates ranged between 7.19 and 8.25 per
cent. Floating rate movement ranged from 0.20 to 0.76 per