Interest Rates

[Aeryn]

T#####rs.

They are always very fast to price in increases and slow to bring the rates down. grrrrrr

What you said, x100.
The timing of this race back up thing couldn't be worse from my personal perspective. I just can't believe the overnightness and short intervals between these rises - is it justifiable?

Where is the best place to look for warning signs that they will raise them again in a day or two....? Is there anyone that's accurately predicted the last week of shenanigans?

Aeryn

[brendan]

What you said, x100.
The timing of this race back up thing couldn't be worse from my personal perspective. I just can't believe the overnightness and short intervals between these rises - is it justifiable?

Where is the best place to look for warning signs that they will raise them again in a day or two....? Is there anyone that's accurately predicted the last week of shenanigans?

Aeryn

In a crystal ball. My crystal ball says BNZ rates going up tonight.

[Badger]

Still doesn't seem to be any sign of Term Deposits
and the like, following the trend - not where I look.

Savers seem to be a target, probably since its the only real capital left that hasnt been printed into exsistence that can be siphoned off to oblivion, then government and bankers have new dependants for economic serfdom. Chevrons spin after all its all about human energy!

[muppet]

Yep, the BNZ have moved their rates.

6mths downwards but 2, 3, 4, 5yr rates upwards.

See them at http://www.interest.co.nz/mortgages.asp

[Austrokiwi]

What you said, x100.
The timing of this race back up thing couldn't be worse from my personal perspective. I just can't believe the overnightness and short intervals between these rises - is it justifiable?

Where is the best place to look for warning signs that they will raise them again in a day or two....? Is there anyone that's accurately predicted the last week of shenanigans?

Aeryn

Mid last year is was obvious that NZ would at some time experience what is happening now...............It is direct fall out from the credit crunch.....The issue is simply that to obtain funds NZ banks have to pay a higher risk premium to Overseas lenders. As for predicting more rises You will have to find somewhere that reports regularly on the Lending rates to NZ banks. From What I have been seeing in Europe..... I believe NZ will see more rises in the short term ( NZ Banks are refinancing a large amount of borrowing just now) In a month it may have settled out.

[muppet]

Hey Austro

Do you know how much financing of east European countries has been done by the more well heeled European banking community?

Heard tell that those banks who have lent money especially to the newer EEC countries are becoming quite worried.

[Viking]

Banks cut deposit rates ahead of RBA decision

By George Lekakis
Herald Sun
March 30, 2009 12:00am

THE major banks are aggressively repricing their deposit books ahead of next week's expected rate cut by the Reserve Bank.
With the political pressure mounting on all banks to pass on the full benefit of further easings of monetary policy, two of the major banks have taken drastic steps to protect their funding margins by slashing deposit rates.
From this morning, NAB will slash the rate it pays on three month fixed term deposits from 4.2 per cent to 2.1 per cent.
The NAB move comes after more aggressive repricing by Commonwealth Bank in recent weeks in which it slashed its three month fixed term deposit rate from 4.2 per cent to 1.5 per cent.
According to market research firm, Infochoice, CBA has also crunched its one year fixed rate offer to 1.5 per cent from 3.5 per cent.
The dramatic repricings by CBA and NAB follow recent comments by the chief executives of both banks that they may not be able to pass on the full benefits of additional official rate cuts.
On March 17 CBA chief Ralph Norris cast doubt on how much his bank would be able to pass on to borrowers if the RBA cuts again.

For those of you save money in the bank three words for you all: Cash is trash. Use that money to buy gold or something. ...

(Read More)
www.quangvo.com of www.quangvo.com

"We can't guarantee that we will pass on the full rate reduction as a pass through," he said.
"Certainly there has been at times some improvement, but at the moment we are still seeing rates for international funding eight to 10 times higher than at the start of the crisis."
However the slashing of deposit rates could be political dynamite for the banks if they elect not to pass on next week's expected official cut.
Westpac and ANZ have also lowered short term fixed rates on their deposit products in the last month but their repricings have been more subdued.
With wholesale funding pressures continuing to weigh on lenders, the major banks are reviewing their rates on all deposit products as part of overall programs to contain costs.
So far this year all of the big banks have slashed the rates they pay on internet saver accounts which have become a key market segment through which to acquire customers.
These internet-only accounts, such as CBA's Netsaver and NAB's iSaver, were paying monthly interest of around 7 per cent towards the end of last year, but now deliver a monthly return of only 3 per cent to existing customers.
ANZ continues to be a price leader in this segment among the major banks, maintaining its online saver rate at 4 per cent.

[Hawkeye77]

What you said, x100.
The timing of this race back up thing couldn't be worse from my personal perspective. I just can't believe the overnightness and short intervals between these rises - is it justifiable?

Where is the best place to look for warning signs that they will raise them again in a day or two....? Is there anyone that's accurately predicted the last week of shenanigans?

Aeryn

You should read Bernard Hickeys blogs at www.Interest.co.nz, each morning he has a new report and he has been pretty accurate with his interest rate predictions lately.

[dandan]

T#####rs.

They are always very fast to price in increases and slow to bring the rates down. grrrrrr

Any thought's on why Ausi fixed mortgage rates havn't started going up?

[tpr2]

I haven't been watching dandan but I would guess that they didn't need to do as much borrowing offshore.

[muppet]

Bollard's warning on rates
By DAVID HARGREAVES - BusinessDay
Last updated 09:33 01/04/2009

The Reserve Bank has fired a warning shot about the sudden recent sharp rise in interest rates.

The central bank said this morning that current levels of long-term interest rates in this country were "out of line" with its expectations.

Reserve Bank Governor Alan Bollard said the recent rise in rates charged between financial institutions was "unwarranted and inconsistent with the monetary policy outlook".

The New Zealand dollar reacted sharply to the announcement, falling over a cent in value against the American currency. A short time ago it was worth US55.9 cents compared with over US57c prior to the RBNZ statement.

The comments by Bollard indicate a clear concern from him that recent actions of the markets could put further pressure on struggling Kiwi households and on the depressed New Zealand economy.

A number of factors have caused the recent increase in longer term rates. Governments around the world are issuing huge amounts of bonds as they seek to pump money into their own economies.

This is forcing banks sourcing money offshore to pay higher rates.

There has also been a very strong rise in the value of the New Zealand dollar - largely due to the weakness of the US dollar.

In addition there has been a sudden flood of Kiwi mortgage holders looking to fix their home loans on long term rates. Several banks have increased their longer term fixed mortgage rates.

As well, the RBNZ, when lowering official interest rates from 3.5 percent to 3 percent, indicated it did not see much more scope for further falls.

All of these factors have contributed to what is effectively a sharp tightening in monetary conditions within New Zealand - contrary to the RBNZ's wishes.

Continuation of such a trend could put further downward pressure on an economy that has been in recession since the start of 2008.

"As we said in our 12 March Monetary Policy Statement, the economic recovery is expected to be very gradual. Furthermore, the risks around the outlook continue to be weighted to the downside," Dr Bollard said in a statement.

"As indicated in our March Statement, we are projecting interest rates to remain at relatively low levels for an extended period."

Dr Bollard said that if this "apparent distortion" in the market persists, it could put unnecessary pressure on the cost of borrowing by firms and households.

The comments by Bollard are effectively an attempt to "jawbone" interest rates and the New Zealand dollar down.

A number of economists in recent days have been calling for just such an action from the RBNZ governor.

http://www.stuff.co.nz/business/2306646/Bollards-warning-on-rates

[dandan]

This is ridiculous, you could see this coming in the first week of March and the only way to avoid it was to drop the ocr by 1% and release a statement giving the impression that at least a further .5% was coming next.

Message to Alan:
Stop watching Ausi, and the next time I see you walking to work, I'm a jump out my ride and dowse yo ash in tar and feathers.

Kind regards
dandan

[muppet]

Kiwibank hikes 2 to 5-year mortgage rates
9:10AM Wednesday Apr 01, 2009

Kiwibank has raised its 2, 3, 4 and 5 year mortgage rates this morning, bringing them into line with rate hikes announced by the other bigger banks over the last week.

Kiwibank lifted its key 2 year rate to 6.19 per cent from 5.99 per cent and lifted its 5 year rate to 7.60 per cent from 7.25 per cent.

Meanwhile BNZ announced it had cut its 6 month mortgage rate to 5.5 per cent from 5.79 per cent, while it increased its 2, 3, 4 and 5 year mortgage rates.

This means BNZ's fixed mortgage rate curve is clearly positive and with a full 200 basis points now between its 6 month rate at 5.5 per cent and its 5 year rate at 7.5 per cent.

* interest.co.nz's mortgage rates table

- INTEREST.CO.NZ

[tpr2]

if it was any other industry it would be called price fixing!

[tpr2]

I read about the banks finding it expensive to get money offshore but cripes what sort of margin are they factoring in?
Sibor is about 1.2% I think. Not sure what the rates are on govt bonds in the asia region but treasury bonds are about .2% aren't they?