Rates rises slowed in November

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Wednesday, December 3rd 2003, 8:40AM

Rates increased consistently this month. The latest mortgage interest rate survey conducted by Good Returns, showed that the frequency of increases slowed only as lenders held their collective breath for the Reserve Bank's OCR announcement later this week.

Another interesting development this month was new variations to their lending products offered by some banks. For example, Westpac has withdrawn its 30 month rate and replaced it with an 18 month one set at 6.99%, while the BNZ announced a three year fixed rate of 7.60% with the first three months at 3.99%.

The survey showed that fixed rates for the month of November increased by up to 0.7%.

Six month fixed mortgage rates showed significant movement (one lender increased its six month fixed rate by 0.7%) particularly from some of the banks that have held the lowest rates.

As at 31 October the range of one year fixed mortgage rates was 6.25 - 7.54% compared with 6.15% to 7.32% at 31 October

Last month many lenders offered a 2 year fixed rate at 7.10%. This month 15 lenders offered the same loan at 7.4%. The range of 2 year rates as at 30 November 7.10 - 7.93% compared with 6.5 and 7.77% last month. The graph illustrates the convergence by some lenders.

Three year rates increased by up to 0.5% last month - showing another trend this month with the rate of the increases itself increasing. 3 year fixed rates now range from 7.20% - 8.30% as compared with 6.70% - 8.02% last month.

Even floating rates were impacted this month with two lenders increasing their rates. The lowest floating rate on offer as at 30 November was 6.55%: the highest floating rate was 7.95 per cent. The highest rate for November is 0.7% higher than that offered at the end of Octocber.

Five year fixed interest rates now range from 7.6 - 8.29%.

Good Returns and The New Zealand Mortgage Magazine editor Philip Macalister said that he expects the plateau in rates to be broken as soon as the Reserve Bank has made its announcement. "Economists are divided over whether the Reserve Bank will increase its Official Cash Rate (OCR) from 5% this week" he says, "but all say it will happen soon. In which case we can only expect mortgage rates to stay on the up and up."

As at November 30, four and five year rates ranged between 7.5 - 8.29% per cent.

« Experts divided on this week's OCR announcement

RBNZ leaves cash rate unchanged »

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