KEY POINTS:
The flurry of mortgage rate reductions that began on Friday with ASB and BNZ has carried on with Westpac and National Bank both reducing their key mortgage rates.
The banks are passing on reductions in wholesale interest rates in recent weeks as fears about global credit crunch ease and the prospects increase for a cut in the Official Cash Rate (OCR) by the Reserve Bank as soon as June.
Westpac cut its key 2 year mortgage rate to 9.4 per cent from 9.7 per cent, matching the cut announced by ASB on Friday. Westpac has also cut its special "fighting rates" of 21 months to 9.4 per cent and 33 months to 9.29 per cent.
National Bank cut its fixed rates across the board, also reducing its 2 year rate to 9.4 per cent.
While many economic signs - such as the flagging real estate market - are there to clear the way for Allan Bollard to start contemplating reducing the OCR at his next announcement on June 5, most analysts think he's unlikely to allow any untightening of his grip on anti-inflationary measures just yet.
Last Friday, ASB cut a number of rates. It trimmed its key 2 year mortgage rate to 9.4 per cent from 9.7 per cent, while also cutting its 6 month rate to 9.75 per cent from 9.85 per cent and its one year rate to 9.4 per cent from 9.75 per cent.
ASB acknowledged that the financial markets continue to be volatile, but felt there was room to ease their rate card as there has been a distinct reduction in the cost of funds.
The move, if sustained, will be a huge relief for many homeowners with large mortgages who have faced rising mortgage rates, particularly in the last six months as the banks passed on the higher costs of wholesale funding because of the global credit crunch.
- INTEREST.CO.NZ
