The bank has to justify interest rate rises from here, economist says
A big four bank has raised three short-term fixed rate home loans, but according to one economist, further interest rate rises from here would have to be explained by the banks.
Westpac has lifted its six-month special rate by 10bps to 7.19%, its one-year special rate by 20bps to 7.19%, and its special 18-month rate by six basis points to 6.95.
At the Reserve Bank’s latest review, the official cash rate was maintained at 5.5%, with RBNZ signalling that the OCR has already hit its peak, although some economists have suggested a further hike may be required.
Brad Olsen (pictured above), Infometrics chief executive, said there was no significant change in international swap rates since the middle of the month, Stuff reported.
Olsen said Westpac was probably adjusting its pricing to be consistent with the rest of the market, which reflected higher bank funding costs having “bedded in” due to the stabilisation of swap rates.
He said the current interest rates were likely as high as they were going to go.
“Without the Reserve Bank signalling any more increases, I still feel like we are at or near the top. If there are further adjustments that banks need to make, it should be accompanied by better communication around what has driven that,” Olsen said.
He said it would be tough for banks to justify further rises, unless there was movement in swap rates or the OCR.
In case of more hikes, banks would have to offer more information about why.
“That’s a reasonable expectation given the influence these numbers are having over people’s lives,” Olsen said.
Westpac raised its standard one-year rate to 7.79%, Stuff reported.
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