Consumer price index expected to be flat through to 2025
Kiwibank has increased the rates of a range of its home loans and term deposits.
According to a stuff.co.nz report, the bank’s one-year fixed home loan rate has increased to 7.25% from 7.15%, while its two-year special rate has increased to 7.05% from 6.99%. Its three-year fixed special has increased to 6.89% from 6.69%, its four-year special to 6.79% from 6.49, and its five-year special to 6.79% from 6.49%.
Standard rates have also increased by the same margins, the increases are between 7.69% (four- and five-year) and 8.25% (one-year).
Term deposit rates also increased by between 15 basis points at the shorter end and 30 basis points for five-year terms.
Consumer price index data has shown weak results at 5.5%, and thus, official cash rate increases were less likely. Some analysts are expecting this rate to persist through 2025.
Gareth Kiernan, chief forecaster at Infometrics, said there are some factors that influenced these movements, including the cost of funding on international markets.
“At the shorter end, Kiwibank looks like it’s moving its mortgages to be more in line with the other banks – previously they’ve been a little bit lower,” said Kiernan. “At the longer end, there is still definite upward pressure coming through in the wholesale markets, with swap rates up to seven years hitting their highest levels in the last couple of weeks since at least 2010. Ten-year rates are at their highest since 2011.
"There’s ongoing concerns in international markets that getting inflation down from its current rates of 3.5% to 4.5% across the likes of the US, Canada, and Europe could prove more difficult than the easing in inflation over the last nine to 15 months.
“Markets are betting that although most central banks now have their cash rate targets close to or at their peaks, the timing of any potential interest rate cuts is being pushed out, which is driving up longer-term rates. At the moment, New Zealand’s longer-term wholesale rates are being taken along on that ride.”
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