OCR Announcement - Canstar Comments

Please attribute quotes to Canstar general manager, Jose George

"RBNZ’s announcement to hold the cash rate is in line with market expectations.

“After a flurry of increases in mortgage rates over the last quarter, recent weeks have seen a slowdown on this front. However, with lenders remaining reliant on overseas capital to fund their domestic mortgage book further rate increases cannot be ruled out.

“For home loan customers, Canstar recommends they review budgets and stress test their repayment capability (through online calculators) to ensure that they can accommodate any potential increased cost in continuing to service their loan. Depending on individual circumstances, now may be a good time to negotiate a longer term fixed rate option. Currently, there are at least 10 home loans below 5% p.a. in the 2 and 3 year fixed rate category, according to Canstar’s database.

“For people looking to get on to the property market either as first home buyers or as investors, the early signs of a slowdown in the Auckland market is encouraging but not replicated in other regions where we are still seeing year-on-year price increases. This, together with the costlier home loan environment compared to 12 months ago, still makes it a difficult market to crack for many consumers.

“For savers the situation appears less complex. A recent Canstar review found that term deposit rates, on average, have largely remained unchanged since February 2016 despite a 75bps drop in OCR over this time. Banks are obviously still keen to grow their existing domestic deposit book but it remains to be seen how far they are prepared to go to gain market share.”

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