BNZ offers 4.39% for 12 months after cash rate unchanged

The Bank of New Zealand yesterday introduced a 12-month fixed-term lending rate of 4.39% after the Reserve Bank held its official cash rate unchanged at 1.75%.

BNZ director of retail and marketing Paul Carter said the rate gave customers the flexibility to fix a competitive rate and pay off their loan faster.

Research had showed the BNZ 66% of New Zealanders with a mortgage considered their home loan structure and repayments regularly.

``This is a great opportunity for people looking for a great deal to maximise their repayments and therefore pay off their loans faster.''

New Zealanders were still enjoying some of the lowest interest rates in a generation and the economic outlook indicated that might continue for most of 2018, he said.

However, it was not time to be complacent. It was a good time for people with home loans to consider their position and make sure they were paying off their mortgage rates faster.

Interest.co.nz showed the BNZ 12-month rate of 4.39% was the lowest from major lenders.

ANZ was 4.95%, ASB was 4.79%, Westpac was 4.99%, SBS was 4.99%, Kiwibank was 4.95% and the Co-operative Bank was 4.44%.

BNZ economist Stephen Toplis said the Reserve Bank stuck to its core story with yesterday's Monetary Policy Statement.

It continued to hold a modest tightening bias but saw no need to move interest rates anytime soon.

The Reserve Bank did not have a confirmed first rate increase until February 2020, backed up by a second increase in November 2020.

The upward track was predicated on the idea GDP (gross domestic product) growth would be sufficiently strong to ensure current capacity pressures intensified further, he said.

The central bank again acknowledged there were substantial upside and downside risks to the projections, meaning interest rate rises could be further postponed.

The labour market concerns were highlighted by the Reserve Bank.

``Right now, the unemployment rate is 4.5% and the bank has forecast it to drop further from current levels. Moreover, it believes will will stay at low levels for the foreseeable future.''

The key was the word ``risk'', Mr Toplis said.

There was limited signs of wage inflation now but there must be a nagging concern at the Reserve Bank it was just a matter of time.

The BNZ believed the central bank might have a communication issue on its hands over the next six months. It was likely consumer price inflation and economic growth would end up lower than the bank had forecast, he said.

``This will have folk clamouring for rate cuts. We think such weakness will be relatively transitory but will cause some grief nonetheless.''

 

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