Floating and Fixed Rates begin to tumble

Floating and Fixed Rates begin to tumble

Floating and fixed mortgage interest rates eased significantly in the month to May 10, largely due to the Reserve Bank lowering the Official Cash Rate by 0.25 to 5.50 per cent on April 28, according to the latest mortgage interest rate survey conducted by the Real Estate Institute of New Zealand.

REINZ National President, Graeme Woodley said today that most lending institutions had amended their one to three year fixed rates over the thirty days to May 10. Thirteen of the eighteen institutions surveyed dropped their fixed rates between 0.14 and 0.66 per cent, with most fixed rates dropping by 0.25 per cent.

Floating rates experienced a similar degree of easing, the vast majority of floating rates on offer falling by 0.20 to 0.26 per cent.

Mr Woodley said, "The Institute applauds the Reserve Bank’s proactive reaction to what Dr Bollard terms, “unfolding evidence of a slowdown”, as the reduction of the Official Cash Rate by 0.25 per cent will not only benefit home owners, but will stimulate the entire economy.

"The majority of lenders dropped both their fixed and floating rates over the last thirty days, an encouraging sign for New Zealand home owners. In particular the average rate for floating mortgages has eased significantly. "

Mr Woodley said that compared to last month, where the easing of rates constituted ‘tweaking’ by most of the institutions, the rate changes across both banking and non-banking institutions were significant.

He said, “Some rates lowered by as much as 0.86 per cent, however generally the degree of movement was between 0.25 and 0.35 per cent. This is much more significant than the 0.10 to 0.25 per cent range in the month to April 10.”

“Prior to this month’s survey, movement in rates appeared to represent merely a realignment of rates between institutions. In the latest figures, we have begun to see a degree of movement that delivers tangible benefit to homeowners. For example, in the thirty days to April 10, two-year fixed rates ranged from 6.75 and 7.10 per cent. The latest survey shows that range has eased by 0.25 to 0.30 per cent, to now range between 6.50 and 6.80 per cent.”

As of May 10, one year fixed rates range between 6.20 and 6.95 per cent, compared with 6.45 and 6.95 per cent to April 10; three year fixed rates range between 6.65 to 7.00, compared to 6.85 to 7.25 last month; while four and five year rates range between 6.80 to 7.20 per cent, compared to 6.90 to 7.45 per cent last month.

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